By CHRISTOPHER RUGABER and KEN SWEET

WASHINGTON (AP) — The Federal Reserve’s top banking regulator on Tuesday released new guidelines for the agency’s supervision of the financial system, earning praise from industry trade groups and criticism from her predecessor.

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In a set of sweeping changes, the principles call for bank examiners to focus on material financial risks and to “not become distracted from this priority by devoting excessive attention to processes, procedures, and documentation.” The guidelines are set out in a memo originally distributed to Fed employees Oct. 29 but released Tuesday.

Michelle Bowman, the Fed’s vice chair for supervision, said the principles will “sharpen” the central bank’s focus and build “a more effective supervisory framework.”

“By anchoring our work in material financial risks, we strengthen the banking system’s foundation while upholding transparency, accountability, and fairness,” Bowman said in a written statement. Bowman was named vice chair by President Donald Trump in March.

Since Trump took office, federal bank regulators have been rolling back regulations that govern the nation’s banking system and other financial services companies. The Consumer Financial Protection Bureau, created after the 2008 financial crisis, is effectively not operating presently and has negated several of the regulations it put into place under President Joe Biden.

Also Tuesday, Fed governor Michael Barr, who preceded Bowman as the vice chair for supervision, sharply criticized the changes in banking oversight at the Fed and at other agencies this year.

“We are now, I believe, at a moment of inflection in the regulatory and supervisory approaches that help keep banks healthy,” Barr said in a speech. “There are growing pressures to weaken supervision … in ways that will make it harder for examiners to act before it is too late to prevent a build-up of excessive risk.”

The announcement by the Fed matches a similar move by the Office of the Comptroller of the Currency, which also loosened how it measures risk among the banks it supervises as well as removed issues like reputational risk from how examiners look at the banks.

Under the Fed’s new rules, banks can only be tested for material risks to their businesses or balance sheets, such as bad loans or unsound business practices. Banks will also able to self-certify on certain risk and supervision issues. These changes have been among the top priority for the banking industry since President Trump was elected into office.

“Banks are most resilient when their examiners prioritize material financial risks, not check-the-box compliance exercises,” said Greg Baer, president and CEO of the Bank Policy Institute.

Under the new framework, the Fed will also defer to other major bank regulators, including the OCC and state-level regulators, when it comes to who should supervise and examine these institutions.

Bowman has also moved to reduce the Fed’s regulatory staffing by about 30%, mostly through attrition, a step Barr also criticized Tuesday.

The cuts “will impair supervisors’ ability to act with the speed, force, and agility appropriate to the risks facing individual banks and the financial system,” Barr said. “Such a drastically reduced staff will slow response time for the public and the banks themselves, limit supervisory findings and enforcement actions, and erode supervisors’ ability to be forward-looking.”

By TODD RICHMOND

MADISON, Wis. (AP) — Plea negotiations with a Wisconsin judge accused of helping an immigrant evade federal agents are underway as her trial nears, the newly minted federal prosecutor overseeing the case said Tuesday.

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Interim U.S. Attorney Brad Schimel told The Associated Press in a telephone interview that attorneys are “discussing potential resolution” of the case against Milwaukee County Judge Hannah Dugan, but her attorneys haven’t shown they’re willing to accept any offer.

A plea agreement would mark a surprising de-escalation by prosecutors in a case that has become a flashpoint in President Donald Trump’s sweeping immigration crackdown. Schimel said plea negotiations are part of a “normal process to resolve a case and eliminate risk for both sides, to find a resolution that makes sense. That’s all.”

Dugan’s defense attorneys said she’s innocent and they’re preparing for a trial next month.

According to court documents, federal agents in April learned that an immigrant who was in the country illegally was scheduled to appear before Dugan in a state battery case. The agents traveled to the Milwaukee County Courthouse to apprehend the man, 31-year-old Eduardo Flores-Ruiz.

Dugan learned the agents were in the courthouse and showed Flores-Ruiz out of her courtroom through a private door. Flores-Ruiz was able to make his way outside, but agents captured him following a foot chase. The U.S. Department of Homeland Security announced Friday that he had been deported.

Dugan was arrested at the courthouse a week after the chase and a federal grand jury indicted her on charges of obstruction and concealing an individual to prevent arrest in May. Dugan has argued she did nothing wrong and she has complete authority over movement in her courtroom.

Her trial is set to begin Dec. 15. She could face up to six years in prison if convicted.

Dugan’s indictment has intensified the clash between the Trump administration and local authorities over the Republican’s sweeping immigration crackdown.

Democrats have accused the Trump administration of trying to make an example of Dugan to blunt judicial opposition to the crackdown. The administration has worked to vilify her on social media. FBI Director Kash Patel posted a photo on the social platform X of Dugan being led out of the courthouse in handcuffs. And the U.S. Department of Homeland Security posted on X last week that Dugan has taken the term “‘activist judge’ to a whole new meaning.”

U.S. Attorney General Pamela Bondi on Monday appointed Schimel as the Eastern District of Wisconsin’s interim U.S. attorney. He replaces acting U.S. Attorney Richard Frohling, who brought the case against Dugan. Schimel served as Wisconsin attorney general from 2015 to 2019. Then-Gov. Scott Walker appointed him to a state judgeship after he lost reelection in 2018. He ran unsuccessfully for the state Supreme Court this past spring.

John Vaudreuil, a former U.S. attorney in Wisconsin’s Western District, said he was surprised that Schimel would comment publicly on plea negotiations, saying such discussions are private and announcing them could be seen as putting pressure on a defendant.

Still, he said that he’s not surprised negotiations are taking place. During his stint as U.S. attorney, his office extended offers in most cases as a professional courtesy even if it appeared there was no middle ground, Vaudreuil said.

Schimel is likely taking orders from the upper echelons of the U.S. Department of Justice on how to handle Dugan, making the chances of a resolution short of trial slim, he said.

“If the attorney general of the United States says it has to be a felony and it has to be jail time, I don’t suspect that’s where the defense is starting from,” Vaudreuil said. “When the case started, there were a lot of things said from on high that would make it difficult to come to a resolution of the case.”

By ISABELLA VOLMERT

President Donald Trump is insisting that the redistricting fight in Indiana is not over even as the GOP-led state Senate again refused Tuesday to return to the Capitol this year for a special session to draw new congressional maps.

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Divisions among Indiana’s GOP lawmakers were on full display as senators voted to instead convene next for the regular session in January despite the shadow of Trump’s threats to support primary challengers to legislators opposed to redistricting.

Trump has blasted individual senators in social media posts, including Senate President Pro Tem Rodric Bray, who said last week there weren’t enough votes to pass a redistricting proposal and that the chamber would not meet.

“Soon, he will have a Primary Problem, as will any other politician who supports him in this stupidity,” Trump said of Bray on Tuesday on Truth Social. Bray isn’t up for reelection until 2028, along with half the Senate body.

The vote was the latest show of defiance against Trump and his ally, Republican Gov. Mike Braun, who want Republicans to use their supermajority in both legislative chambers to redraw the state’s congressional boundaries before the end of the year.

While states usually draw new district boundaries every 10 years with the census, Trump wants Indiana and other Republican states to create congressional maps that will favor Republican candidates and give them an easier path to maintain control of the U.S. House in the 2026 elections. The stakes are high since Democrats only need to flip a handful of seats and midterm elections usually favor the party opposite to the one in power.

The blow to Trump’s efforts came as a federal court on Tuesday derailed, for now, his hopes to secure more seats in Texas. A panel of three judges blocked the state from using a new congressional map that would boost Republicans.

Republicans currently outnumber Democrats in Indiana’s congressional delegation 7-2.

Braun suggested in a statement that he is exploring ways to compel the Senate to return in December and take a vote. But his options remain unclear, other than maintaining political pressure on Republicans refusing to go along.

“I will support President Trump’s efforts to recruit, endorse and finance primary challengers for Indiana’s senators who refuse to support fair maps,” Braun said.

Republican infighting

Braun first called for a special session last month and lawmakers initially agreed to meet in early December. That was before Bray’s declaration last week. Senators voted 29-19 Tuesday to reconvene in January instead.

Braun, a first-term governor, said he had a call with Trump Monday.

“This is a slap in the face of the governor of the state of Indiana to do something like this,” state Sen. Michael Young, who favors redistricting, said on the floor Tuesday. Lawmakers were gathered at the statehouse for a ceremonial day that occurs each year before the regular session in January.

Republican Sen. Greg Goode, whom Trump called out by name on social media over the weekend for resisting redistricting, was the victim of a swatting attempt on Sunday. Goode said in a statement Tuesday he will not take a public stance on the topic until he sees an official map.

More state senators have come out against redistricting this week, including a handful of Republicans calling for their party to focus instead on flipping a Democratic seat in northwest Indiana. The 1st Congressional District has been seen as a possible pickup for Republicans in recent years.

“The message from my district has been clear — they do not support mid-cycle redistricting, and therefore I cannot support it,” state Sen. Travis Holdman, who represents a rural district near Fort Wayne, said in a statement Tuesday. “I do not believe redrawing our map will guarantee a 9-0 result.”

It is unclear whether the state House, which does have the votes to take up redistricting, will return in December. Speaker Todd Huston told lawmakers to keep the first two weeks of December open on their calendars. Yet in a statement, Huston said he hopes one day that Congress prohibits mid-cycle redistricting.

“But until that happens, Indiana cannot bury its head in the sand,” Huston said.

Redistricting fight grows

Texas was the first state to kick off the redistricting fight this year. Republicans redrew the state’s congressional map to give the GOP five additional seats. Voters in California recently approved a ballot initiative that would give Democrats five more seats.

Both plans are now mired in legal battles.

Republicans in Missouri, North Carolina and Ohio have all adopted new districts to boost the GOP, while the Democratic-led Virginia General Assembly has taken a step toward redistricting with a proposed constitutional amendment.

Efforts have come up short in the Republican-led Kansas Legislature and in Democratic-led Illinois and Maryland.

By SOPHIE AUSTIN

SACRAMENTO, Calif. (AP) — A U.S. appeals court on Tuesday paused a California law set to take effect in January requiring large companies to report every two years on how climate change could hurt them financially.

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Another new law requiring major companies to annually disclose their carbon emissions can stay in place for now, the court ruled.

The policies would be the most sweeping of their kind in the nation, and proponents say they would increase transparency and encourage companies to assess how they can cut their emissions.

The U.S. Chamber of Commerce asked the 9th Circuit to pause the laws, which were set to take effect next year, arguing they violate the companies’ First Amendment rights. The group also asked the Supreme Court last week to weigh in.

“We look forward to continuing our appeal and securing an injunction of both climate disclosure laws, which result in massive compliance costs for companies and their supply chains,” Chamber of Commerce lawyer Daryl Joseffer said of Tuesday’s ruling. “One state should not have the ability to impose this kind of burden on the entire country.”

Lindsay Buckley, a spokesperson for the California Air Resources Board, which is drafting rules to implement the laws, said the agency was reviewing the ruling and could not comment further. The state has argued that the laws don’t violate the First Amendment because commercial speech isn’t protected the same way under the Constitution.

The financial risk disclosure law, which Democratic Gov. Gavin Newsom signed in 2023, applies to companies making more than $500 million a year that do business in California. The Air Resources Board estimates more than 4,100 businesses will have to comply with the legislation.

The emissions reporting law, which the state passed the same year, applies to businesses that make more than $1 billion a year and do business in the state — which covers roughly 2,600 companies, according to state air regulators. They will have to report planet-warming pollution from burning fossil fuels directly, as well as releases from activities such as delivering products from warehouses to stores and employee business travel.

The U.S. Securities and Exchange Commission approved a rule last year requiring some public companies to report their greenhouse gas emissions and climate risks, but the agency paused the regulation amid litigation.