Financial Associations Recommend Key Changes to Federal Reserve Stress Capital Buffer Proposal
Washington D.C. – The Financial Services Forum and American Bankers Association today commented on changes proposed by the Federal Reserve Board (FRB) to reduce volatility in capital requirements caused by the stress capital buffer (SCB) framework. The proposal provides two-year averaging of an institution’s SCB and a new annual effective date—changes that would address year-to-year volatility in capital requirements for banks subject to the stress test regime.
“We appreciate the FRB’s efforts to reduce volatility of SCB requirements through the Proposal and welcome it as a useful first step in the FRB’s previewed amendments to the broader stress testing framework,” the associations stated.
The associations offered several key recommendations:
- Effective Date: Implement the revised SCB rule on January 1, 2026, while allowing banks to continue operating under the current framework through September 30, 2026.
- Asymmetric Averaging: Introduce a two-year asymmetric averaging method to ease the impact of rising capital requirements.
- Dividend Add-On: Remove the dividend add-on component, as existing regulations already govern distribution payments.
The full letter can be found here.
Media Contacts:
Laura Peavey
Financial Services Forum
Josh Britton
American Bankers Association
About Financial Services Forum
The Financial Services Forum is an economic policy and advocacy organization whose members are the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
About American Bankers Association
The American Bankers Association is the voice of the nation’s $24.5 trillion banking industry, which is composed of small, regional and large banks that together employ approximately 2.1 million people, safeguard $19.5 trillion in deposits and extend $12.8 trillion in loans.