Dear reader,

In this issue, we spotlight one of our member institution’s perspectives on improvements to a significant part of the large bank capital framework and what they could mean for the functioning and strength of the vital U.S. Treasury market.   Fifteen years post-crisis, much of our large bank capital regime has largely gone unexamined and no longer reflects the realities of our financial system and the needs of our economy.  An update to the leverage capital ratio is one of several important areas of reform.

On a personal note, this will be my final Forum File. It’s been a privilege to share these updates with you, and I’m gratified by the continued accomplishments of the institutions represented by the Financial Services Forum.

Thanks for your interest in the work of this organization and its members.

Kevin Fromer, President and CEO, Financial Services Forum

Penny For Your Thoughts

Tiffany Eng, Global Treasurer for BNY

Regulators are revisiting leverage ratios to improve Treasury market resilience. From your vantage point as Global Treasurer, what’s the key issue at stake here?

At its core, this is about ensuring the Treasury market remains liquid and resilient, especially in times of stress. The Treasury market plays a critical role in the global financial system — not only are Treasuries used as collateral and for liquidity management, but they also underpin close to $1 trillion in cash and $5 trillion in financing transactions daily. When we think about regulatory frameworks like the SLR or Tier 1 leverage ratio, we’ve seen they can inadvertently disincentivize Treasury market intermediation when it’s needed most— during periods of elevated volatility. It’s increasingly important during these periods of stress that banks can provide liquidity and ensure the Treasury market functions in an orderly manner, when banks act as shock absorbers for both cash and Treasuries.

So the key issue is whether the current leverage rules are overly binding on cash and Treasuries, particularly in crisis scenarios when deposit balances may rise and Treasury intermediation is needed, limiting banks’ ability to support markets that rely on us.

There’s an ongoing debate — should regulators lower leverage ratios across the board, or take a more targeted approach excluding safe assets like reserves and Treasuries? What’s your view?

This is not a binary choice. Each option addresses different aspects of the issue. Lowering leverage requirements overall helps ease constraints and re-establishes leverage ratios as a backstop rather than a binding constraint. But banks could use that additional capacity for any number of purposes, not necessarily Treasury market intermediation, and that capacity – if already re-allocated by banks – may not be available in a time of stress.

A more targeted fix — excluding cash reserves, Treasury repos, or bills — would directly improve the capacity to support cash and Treasury market liquidity. That’s particularly helpful in periods of stress when you need intermediaries to step in and balance markets. My view is that a combination of approaches, along with tools like the standing repo facility and central clearing enhancements, is likely the most effective and prudent path forward.

How should reforms be timed — should we wait for the next crisis to act, or take proactive measures?

The Treasurer’s mindset is always to prepare, not predict. We’re constantly managing across a wide set of risks — capital, liquidity, interest rate — and stress-testing our position against many different scenarios. It’s much more impactful to put structural and permanent solutions in place now, before stress conditions materialize. That way, we foster the right behaviors and reduce reliance on temporary or emergency measures later on.

We don’t position our balance sheet assuming regulators will step in during a crisis. Instead, we plan with the regulations as they exist today. From that perspective, reforms that provide clarity and durability are more effective and help to ensure that the banking sector can continue to function as a source of stability.

What principles should guide leverage ratio reform from a long-term perspective?

The most important principle is that policy should be targeted to the problem we’re trying to solve. Leverage ratios are one piece of a larger prudential framework — they provide a backstop but aren’t well-suited to capture liquidity risk or interest rate risk. Reforming any single measure in isolation risks making another constraint more binding, without addressing the underlying structural issue.

That’s why I support a holistic, resilient approach. Reforms should support both safety and liquidity in the Treasury market — which is the world’s premier government bond market — while reinforcing sound, risk-based management practices. As the market grows, our regulatory frameworks should evolve too, allowing banks to serve as resilient intermediaries through all conditions.

Value Add

BNY’s Enduring Commitment to Pittsburgh

BNY continues to demonstrate its long-term commitment to Pittsburgh through the renovation and expansion of its campus in the city—one of six strategic global locations for the company and its largest employee base in North America. This investment reflects a broader dedication to supporting clients, empowering employees, and strengthening ties with the local community.

Pittsburgh has long played a central role in shaping American industry and innovation, from steel production to the emerging frontier of artificial intelligence. It is also where Mellon Financial—founded more than 150 years ago by Judge Thomas Mellon and his sons—laid the groundwork for what would become a leading global financial institution.

Today, BNY’s presence in Pittsburgh spans all lines of business, serving over 500 regional clients.  Its campus plays a key role in advancing the firm’s artificial intelligence capabilities—driving efficiencies, enhancing client service, and powering the future of finance.  The firm is also a major employer of graduates from local universities, including Carnegie Mellon, Pitt, Penn State, and Duquesne, and supports alternative talent pathways through partnerships like Year Up. Over the past decade, BNY has donated $50 million to the region and maintains leadership roles across prominent civic organizations, reflecting a continued commitment to the city’s growth and vitality.

Through continued investment in innovation, talent, and community, Pittsburgh remains a vital part of BNY’s long-term vision, both as a center of excellence and as a city where the future of finance continues to take shape.

Capital Gains

What we’re doing in Washington

Support for modernizing capital rules to better serve the U.S. economy gained more traction during the Federal Reserve’s recent conference on large bank capital requirements. See key takeaways from industry leaders and policy experts and check out our latest factsheet outlining our capital reform priorities.

In related news,  Forum President and CEO Kevin Fromer welcomed the Federal Reserve’s proposal to reform supervisory ratings for large banks, noting that these changes will “not only strengthen the oversight of large financial institutions, but also promote greater confidence among investors, consumers, and the broader economy.”

Additionally, the Forum applauded the Senate’s confirmation of Jonathan Gould as Comptroller of the Currency. “The Forum looks forward to working with Comptroller Gould and his team to advance policies that support consumers, businesses of all sizes, and America’s communities,” Fromer said.

Looking ahead, the Forum is preparing for a leadership transition. After eight years of dedicated service, Kevin Fromer will be stepping down. We’re excited to welcome Amanda Eversole, Executive Vice President and Chief Advocacy Officer at the American Petroleum Institute, as our next President and CEO.

Our Two Cents

Research from the Forum

There’s been a lot of conversation around the proposed changes to the Supplementary Leverage Ratio (SLR) and what it could mean for bank capital levels. A new Forum analysis helps put those numbers in perspective.

The proposal would reduce Tier 1 capital for large banks by about $13 billion— or just 1.4%. That might sound like a lot, but in the context of typical year-over-year shifts driven by regulation, market conditions, or banks’ own strategies, it’s a relatively small adjustment.

To help illustrate this, we’ve included a chart showing how capital levels often fluctuate. The takeaway? This reform wouldn’t meaningfully lower the capital required for U.S. GSIBs.

 

Turning to broader regulatory developments, the latest posts of the BankNotes Blog feature key insights from the Forum research team:

Checking the Balance

Members in the news

Bank of America’s Sports with Us Clinic in Los Angeles teamed up with local groups, including the Boys & Girls Club, the Dodgers, the Rams, and former professional soccer player Mia Hamm to give young athletes a day of hands-on training and a boost in financial skills such as budgeting and resilience.

To mark BNY’s 241st birthday, employees around the world volunteered their time to support local communities from Pittsburgh to Pune, India.

Citi is growing its presence in Charlotte, North Carolina, with a new office that will bring 510 new jobs to the city’s expanding financial hub.

Goldman Sachs is financing a $270 million affordable housing project in the East New York neighborhood of Brooklyn—bringing 385 new apartments and a major boost to the community.

JPMorganChase announced a $15 million loan and $3 million grant to the IFF to expand access to capital for nonprofits and power economic growth across Chicago and the Greater Midwest.

In June, the Morgan Stanley Rural NMTC Fund was announced to address persistent economic and health gaps in rural and tribal communities. Collaborating with Broadstreet Impact Services, the fund is leveraging federal New Markets Tax Credits (NMTCs) to invest $45 million in projects that deliver health care access, affordable and clean energy infrastructure, and living-wage job creation.

State Street hosted its first Boston XChange Demo Day, celebrating innovation with inspiring founders and a shared commitment to expanding economic opportunity in communities nationwide.

Wells Fargo has been named a 2025 Celent Model Bank for transforming corporate digital banking through Wells Fargo Vantage℠, launched in 2022 to meet the evolving digital needs of corporate and commercial clients.