Regulators Probing Banks' NDFI Portfolios After Q3 Blips

Financial Services attorney Dimitri Nionakis was quoted in an S&P Global Market Intelligence article highlighting expectations for increased regulatory scrutiny of banks' lending practices after incidents involving several of the country's largest banks. The third quarter of 2025 saw multiple institutions report exposures to bankruptcies as well as fraud, focusing regulator attention on nondepository financial institution (NDFI) lending. Professionals interviewed by S&P Global Market Intelligence said agencies will look at credit administration, underwriting discipline and risk-rating accuracy, homing in on organizations with risk profiles and business models similar to those that experienced issues in Q3. Mr. Nionakis advised banks to review their portfolios for potential credit issues and maintain strong compliance and risk management procedures.

"Regulatory scrutiny and enforcement activity ebbs and flows, so these programs should remain sufficiently robust so a bank will continue to operate in a safe and sound manner," he explained. "As we've seen, it just takes one large event to cause increased scrutiny industrywide. And some regulators have a long look-back period – the OCC's is seven years."

READ: Regulators Probing Banks' NDFI Portfolios After Q3 Blips