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Kevin Fromer

President and Chief Executive Officer

Last week, the Federal Reserve released its Fall 2021 <a href="https://www.federalreserve.gov/publications/files/financial-stability-report-20211108.pdf">Financial Stability Report</a>.&nbsp;The report does an excellent job of highlighting how banks, and Forum members in particular, have actively contributed to U.S. financial stability.Specifically, the report finds that “banks continued to be profitable and strongly capitalized.”&nbsp;This is an important statement about the condition of the banking sector.&nbsp;But it is particularly important with respect to the largest institutions, specifically Forum members, whose diversified nature is a source of strength.&nbsp;Forum members serve the economy and their customers in a variety of ways depending on the needs of individual customers, companies and other financial institutions.&nbsp;For example, the report notes the significance of capital markets activity during the pandemic – such as underwriting – which has supported industries looking to raise capital and the provision of liquidity to financial markets, both of which directly support the economy.&nbsp;This activity and an improving economy drove performance that enhanced the strength of banks and supported overall financial stability.&nbsp;In effect, consistent and robust profitability is a source of safety and soundness.In terms of overall capital levels, the report clearly documents the strong capital position of Forum members, all global systemically important banks (GSIBs).&nbsp;The chart below, taken directly from the report, clearly shows that current capital levels exceed pre-pandemic levels and also exceed those of large, non-GSIB peer banks.&nbsp;The higher capital levels of Forum members speak directly to the fact that they are subject to the most stringent regulatory capital standards.&nbsp;<figure class="image image-style-align-center"><img src="https://fsforum.com/a/media/screen-shot-2021-11-16-at-4.11.41-pm.png"><figcaption>Source: Federal Reserve Board, Form FR Y-9C, Consolidated Financial Statements for Holding Companies</figcaption></figure>&nbsp;The report also documents the high degree of liquidity maintained by Forum members.&nbsp;The chart below, taken from the report, documents the high level of liquidity on Forum member balance sheets relative to other banks. The data clearly show that Forum members maintain the highest proportion of liquid assets, which supports their resiliency as liquid assets can be quickly and easily monetized in times of stress.&nbsp;<figure class="image image-style-align-center image_resized" style="width:75%;"><img src="https://fsforum.com/a/media/screen-shot-2021-11-16-at-4.13.21-pm.png"><figcaption>Source: Federal Reserve Board, Form FR Y-9C, Consolidated Financial Statements for Holding Companies</figcaption></figure>&nbsp;Notably, the recent Financial Stability Report identifies several near-term financial stability risks worth monitoring, such as increased leverage at certain non-banks, the prospects for sustained inflation, and a worsening of the public health situation. Importantly, the banking sector has acted as a source of strength and resiliency that contributes to financial stability.&nbsp;Forum members will continue to responsibly support the strength of our financial system and the overall economy.

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We advocate for sound policies that recognize the importance of ensuring that banks are able to support the economy, compete internationally, and remain strong. In particular, the Forum supports a review of the GSIB surcharge, a capital requirement that was agreed to internationally, but that U.S. regulators have implemented in a manner that places higher requirements on U.S. banks than that required of foreign competitors. 

The Forum has also weighed in on an international assessment of post-crisis reforms and the clear need to differentiate between jurisdictions and to acknowledge the progress made in the United States.


Capital and Financial Stability

Federal Reserve Financial Stability Report Underscores How Forum Members Support Financial Stability

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Sean Campbell

Chief Economist, Head of Policy Research

<h3>Introduction</h3>A key priority of regulators in the U.S. and Europe is the implementation of the <a href="https://www.bis.org/bcbs/publ/d424.htm">Basel III Finalization</a> (B3F) framework, which makes a variety of adjustments to the original <a href="https://www.bis.org/publ/bcbs189.htm">Basel III</a> package that was adopted a decade ago.&nbsp; Recently, Europe has issued a proposal on how Basel III Finalization would be implemented in Europe and U.S. regulators are expected to issue their own proposal in the near future.&nbsp; The Basel III Finalization framework – as agreed to internationally -- has important implications for certain smaller, private companies that rely on bank lending to finance their investments and do not finance their investment by issuing publicly traded debt and equity securities. Under the framework, U.S. banks lending to these smaller, private companies would be subject to higher capital requirements than larger corporations that issue publicly traded securities.&nbsp; This is problematic because overall creditworthiness is not fundamentally related to whether a company issues securities and firms that do not issue securities to finance their investment are fundamentally more reliant on bank financing.&nbsp; As a result, this new capital rule could unnecessarily limit bank credit for precisely those creditworthy companies that are in the greatest need of bank financing.&nbsp; In this post, we describe the issue, dimension the size of the problem, and discuss important features of the recent European proposal, which suggest a potential approach for ensuring that credit is not unnecessarily restricted from creditworthy companies in the United States.<h3>Bank Credit to Corporate Borrowers: The Current Regime</h3>In the United States, banks that make corporate loans are required to apply a risk weight of 100 percent under standardized capital rules.&nbsp; This means that if a bank has a capital requirement of, say, 12 percent, then the bank must maintain an additional $12 for every $100 in lending that it provides to a corporate borrower regardless of its creditworthiness.&nbsp; Accordingly, a company that has been in operation for 10 years and has borrowed and paid back several bank loans is treated identically to a new, start-up company that has little experience and has never taken out and repaid a bank loan.&nbsp; This approach to capitalizing bank lending to corporates is problematic because it lacks any risk sensitivity – a bank should not need to maintain as much capital to support a loan to a highly creditworthy corporate borrower as it does to a newer and less creditworthy borrower.&nbsp; Ultimately, the lack in risk sensitivity means that more creditworthy borrowers pay higher loan rates and receive less credit than they should based on fundamental credit risk.&nbsp; In Europe, banks are permitted to recognize more creditworthy borrowers through the use of public credit ratings, but that approach is prohibited in the United States due to a provision of the Dodd-Frank Act that prohibits the use of credit ratings in U.S. bank regulation.<h3>Brighter Days Ahead for Corporate Borrowers?</h3>The lack of risk sensitivity in capital requirements for corporate lending is well known by regulators.&nbsp;&nbsp; In the past few years, regulators have attempted to address this problem.&nbsp; More specifically, the Basel III Finalization framework allows banks to identify sufficiently creditworthy borrowers as “investment grade.”&nbsp; A borrower that is investment grade should, according to the bank’s credit analysis, have the financial wherewithal to repay a loan and make all required interest payments with a high degree of certainty.&nbsp; These investment grade – or IG – borrowers would then be subject to a 65 percent risk weight.&nbsp; As a result, if a bank is required to maintain 12 percent capital on a loan to a riskier start up, then a loan to a safer IG borrower would only require roughly 8 percent capital.&nbsp; The resulting lower capital requirement would then allow the bank to extend credit to the IG borrower at a lower and more affordable interest rate.Unfortunately, the story does not end here.&nbsp; The same B3F proposal only allows a bank to identify a corporate borrower as IG if the borrower issues securities, such as equity, that are publicly traded.&nbsp; This provision of the proposal is highly problematic because a large number of creditworthy companies that borrow from banks do not issue publicly traded securities.&nbsp; Additionally, over the past twenty years, there has been a growing trend for firms to remain private and not issue public securities for a variety of reasons related to maintaining corporate control and the regulatory burdens associated with going public.&nbsp; Accordingly, a very large number of creditworthy borrowers would be restricted from this risk-sensitive capital treatment, which undercuts the entire motivation for establishing the IG designation in the first place.&nbsp;<h3>How Problematic is the Public Securities Requirement?</h3>Recent <a href="https://www.nber.org/system/files/working_papers/w28685/w28685.pdf">research</a> from the Federal Reserve Board and the University of Maryland can be used to assess the costs associated with requiring corporate borrowers to be issuers of publicly traded securities in order to be considered IG.&nbsp; Specifically, these researchers use confidential regulatory data from 39 large U.S. banks to measure the number and type of firms that benefit from bank lending.&nbsp; The researchers also identify which firms are issuers of publicly traded securities and which aren’t.&nbsp; Table 1 below shows some select data characteristics from their research.&nbsp;<figure class="image"><img src="https://fsforum.com/a/media/screen-shot-2021-11-09-at-4.45.33-pm.png"><figcaption>Source: Caglio, Darst, Kalemli-Ozcan (2021)</figcaption></figure>&nbsp;The first row of Table 1 shows that there are over 150,000 private firms that borrow from large banks while there are only roughly 3,200 public firms that borrow from banks.&nbsp; Accordingly, the requirements that a firm be an issuer of publicly traded securities would make it impossible for over 150,000 companies to be considered investment grade regardless of their credit quality or borrowing experience.&nbsp; The data in Table 1 also show that private firms are generally much smaller than public firms with a median asset value of only $13 million versus $1.9 billion for public firms.&nbsp; As a result, restricting the IG designation to public firms would disadvantage smaller businesses.&nbsp; Finally, the last row of Table 1 shows the fraction of firm assets financed with liabilities such as bank debt.&nbsp; Private firms generally carry slightly more debt than public firms – in large part because public firms are able to tap public equity markets.&nbsp; In this sense, limiting the IG designation is especially problematic because it disadvantages those firms that are more dependent on borrowing, and bank borrowing in particular, to finance their investment and growth.&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;It may not be the case that all 152,409 private firms identified in Table 1 would meet the investment grade standard.&nbsp; At the same time, if even a modest fraction of private firms are fundamentally creditworthy, then limiting the IG designation solely to public firms would unnecessarily limit credit to thousands of deserving companies that are important to supporting the U.S. economy.&nbsp;<h3>Looking to the Europeans for a Path Forward&nbsp;</h3>Recently, Europe took a step toward codifying the Basel III Finalization framework into a national rule.&nbsp; As discussed above, in Europe banks are allowed to use credit ratings to effectively determine which corporate borrowers are creditworthy and subject to a less-than 100 percent risk weight.&nbsp; Under the B3F framework, a company without a credit rating would also not be eligible for this more risk-sensitive treatment, which is itself problematic and similar to the requirement for a company to issue publicly traded securities.The recent <a href="https://ec.europa.eu/finance/docs/law/211027-proposal-crr-2_en.pdf">European proposal</a>, however, recognizes the problematic restriction to companies with a credit rating and the impact it would have on smaller, unrated companies in need of bank credit.&nbsp; In response, the European proposal sets up a multi-year transitional arrangement that allows unrated corporates that are sufficiently creditworthy to be eligible for an investment grade rating and a 65 percent risk weight.&nbsp; The transitional arrangement clearly states that to be eligible for the 65 percent risk weight there is no requirement that the company either have a credit rating or issue publicly traded securities.&nbsp; Further, the proposal empowers the European Banking Authority to monitor the use of the transitional arrangement and inform the European Parliament on its use so that it can consider a legislative proposal to deal with the treatment of unrated corporate borrowers.The approach taken in the European proposal is sensible and clearly recognizes the negative consequences of unnecessarily restricting credit from creditworthy borrowers for reasons unrelated to their credit risk.&nbsp; As the U.S. moves forward with its proposal, regulators should consider the European proposal and how to ensure that bank credit is not unnecessarily restricted for creditworthy corporate borrowers.<h3>Conclusion</h3>The ability of creditworthy companies to obtain bank credit is important for the growth of the U.S. economy.&nbsp; The current B3F proposal to recognize more creditworthy borrowers would limit the application to only those companies that issue publicly traded securities.&nbsp; Data from the Federal Reserve show that this would restrict over 150,000 companies from being considered investment grade, limiting their ability to access bank credit at reasonable cost.&nbsp; More importantly, this restriction would impact those companies that are generally smaller, and rely more heavily on bank credit.&nbsp; Recently, the Europeans have put forward a proposal that addresses this problem. U.S. regulators should consider the European proposal as they move forward to ensure that credit is not unnecessarily restricted for creditworthy companies that contribute so much to the U.S. economy.

Capital Regulation May Unnecessarily Restrict Bank Credit for Creditworthy Businesses

<h3>Introduction</h3>Over the past 1-1/2 years, large banks have seen a massive increase in their <a href="https://fsforum.com/news/surging-deposits-and-gsib-surcharges-capital-regulation-risks-undermining-economic-recovery">deposits</a> and overall balance sheets as outstanding Federal Reserve balances at banks have more than doubled as a result of the pandemic and related government actions to support the economy.&nbsp; As a result of this balance sheet expansion, the risk-insensitive supplementary leverage ratio (SLR) capital requirement has become more binding and now requires more capital in the aggregate than risk-based capital requirements for Forum members.&nbsp; In this blog, we document the increasingly binding nature of leverage capital requirements, outline the problematic nature of a binding leverage requirement, and discuss the prospects for restoring risk-based rather than leverage capital as the binding capital constraint for large banks.<h3>Leverage and Risk-Based Capital Requirements: Moving from the Backstop to the Frontstop</h3>Financial Services Forum members are subject to both leverage capital and risk-based capital requirements.&nbsp; Forum members must maintain enough Tier 1 capital to yield an SLR of 5 percent.&nbsp; The SLR is a risk-insensitive capital requirement that effectively requires a bank to maintain the same amount of capital for every asset on its balance sheet whether it be cash, a U.S. Treasury bond, or a corporate loan. In addition, Forum members must also maintain a risk-based capital requirement of 6 percent of Tier 1 capital, plus a stress capital buffer that ranges from 2.5 percent to 6.4 percent, plus a GSIB surcharge buffer that varies between 1 percent and 3.5 percent.&nbsp; Risk-based capital requires a different amount of capital for each asset based on its risk profile.&nbsp; Accordingly, a U.S. Treasury bond requires less capital than a corporate loan.&nbsp; Ultimately, a bank must maintain enough capital to satisfy whichever requirement results in a greater dollar amount of capital.Figure 1 shows the difference between the aggregate amount of Tier 1 capital required by risk-based and leverage capital requirements from 2020Q1 through 2021Q3 for Forum members.&nbsp; We omit quarters over which the Federal Reserve excluded reserves and U.S. Treasuries from the SLR so that the amounts can be meaningfully compared.&nbsp; As can be seen in Figure 1, in the first quarter of 2020 (the very beginning of the pandemic), the amount of Tier 1 capital required by risk-based capital requirements was roughly $40 billion more than the amount required by the SLR (the blue bar in Figure 1 is positive $40 billion).&nbsp; As a result, risk-based capital was the binding capital constraint, which means that decisions to allocate funding to lending and other activities would be made based on their risk profile, which incentivizes sound risk management and supports overall safety and soundness.&nbsp;More recent data, however, clearly show that the risk-insensitive SLR is requiring more capital in the aggregate than risk-based requirements.&nbsp; Specifically, the red bars in Figure 1 from the most recent two quarters are negative, which shows that the SLR is requiring more capital than the risk-based requirement.&nbsp; And the most recent data from the third quarter of 2021 show an increase in the amount of capital required by the SLR relative to risk-based requirements (as the bar associated with Q3 2021 in Figure 1 is more negative).&nbsp; The increase in SLR capital is driven by the continued increase in bank balance sheets as the Federal Reserve has continued its accommodative monetary policy, such as asset purchases, leading to an expansion in bank balance sheets and increased leverage requirements relative to risk-based counterparts.&nbsp;<figure class="image"><img src="https://fsforum.com/a/media/screen-shot-2021-11-04-at-12.04.14-pm.png"><figcaption>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Source: Federal Reserve Board, Bank Earnings Releases</figcaption></figure><h3>The Importance of Keeping Leverage Requirements in the Background</h3>Regulators have long recognized that risk-insensitive leverage requirements should serve as a backstop to risk-based requirements and that risk-based requirements should serve as the binding capital requirement.&nbsp; As previously <a href="https://www.federalreserve.gov/newsevents/speech/powell20170623a.htm">stated</a> by the chairman of the Federal Reserve, Jerome Powell: “A risk-insensitive leverage ratio can be a useful backstop to risk-based capital requirements.&nbsp; But such a ratio can have perverse incentives if it is the binding capital requirement because it treats relatively safe activities, such as central clearing, as equivalent to the most risky activities.”&nbsp; Accordingly, as the SLR becomes more binding, large bank incentives become more distorted and bank funding decisions become increasingly disconnected from risk and soundness considerations.The view that leverage requirements should not be the binding capital constraint is founded on well-established economic thinking and research.&nbsp; Specifically, economists such as Stanford’s Darrell Duffie have <a href="https://www.forbes.com/sites/lbsbusinessstrategyreview/2016/03/11/why-are-big-banks-offering-less-liquidity-to-bond-markets/?sh=267cb9e629de">shown</a> how binding leverage requirements reduce incentives to engage in low-risk activities, such as intermediating U.S. Treasury markets.&nbsp; Further, Harvard’s Jeremy Stein, a former governor of the Federal Reserve, has <a href="https://scholar.harvard.edu/files/stein/files/greenwoodtextfa17bpea_002.pdf">pointed out</a> how binding leverage requirements reduce heterogeneity among banks, which creates greater concentration and reduces diversification in the banking industry.&nbsp; As a result, the increasingly binding nature of leverage capital requirements documented in Figure 1 is a cause for concern because of the perverse effects of a binding leverage constraint.<h3>Restoring Leverage to the Background: The Path Ahead</h3>At the beginning of the pandemic, the Federal Reserve <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200515a.htm">acted</a> quickly to exclude holdings of cash and U.S. Treasuries from the SLR calculation.&nbsp; This act was fully appropriate because neither cash nor U.S. Treasuries contribute any significant risk to a bank’s balance sheet.&nbsp; Both cash and Treasuries are low-risk assets that provide banks with an important source of liquidity.&nbsp; In March 2021, the Federal Reserve <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210319a.htm">ended</a> these exclusions, but also indicated that they would “soon be inviting public comment on several potential SLR modifications.”The data presented in Figure 1 clearly demonstrate that the time has come to modify the SLR.&nbsp; Importantly, holdings of low-risk assets that do not meaningfully contribute to risk should not require significant amounts of capital.&nbsp; The simple and transparent approach of excluding these holdings from the SLR calculation, as previously adopted by the Federal Reserve, achieves this result and would go a long way toward ensuring that leverage requirements act as a backstop and not the binding capital constraint.Some have argued that any change to the SLR must be “capital neutral,” which generally means that the total amount of capital required from large banks should not decrease.&nbsp; Such an approach is problematic precisely because the SLR has become too binding and has leaped in front of risk-based requirements.&nbsp; A change to the SLR that removes cash and Treasury exposures and then “adds back” some arbitrary amount simply reestablishes the problem that needs to be solved: leverage capital requirements are too binding.&nbsp; Other complicated schemes that have been floated, such as excluding some but not all cash and Treasury holdings, suffer from the same problem while increasing the complexity of the capital framework. Ultimately, the appropriate amount of capital for large banks should be fully determined by risk-based requirements. Currently, bank regulators are considering a significant recalibration of risk-based requirements through the <a href="https://www.bis.org/bcbs/publ/d424.htm">Basel III Finalization</a> process.&nbsp; Rather than focusing on leverage requirements, regulators should simply and quickly restore leverage requirements to the background and move on to updating risk-based requirements.&nbsp; Such an approach would restore appropriate incentives while ensuring the primacy and relevance of risk-based requirements. &nbsp;&nbsp;&nbsp;<h3>Conclusion</h3>Regulators have long recognized that leverage requirements should serve as a backstop and not the binding capital requirement for large banks.&nbsp; The events of the pandemic have created a situation in which leverage requirements are having an outsized influence on large bank capital requirements.&nbsp; Binding leverage capital requirements result in distorted incentives that are highly problematic for the efficient allocation of resources in the economy.&nbsp; The Federal Reserve should modify the SLR to ensure that it remains in the background and does not serve as the binding capital constraint.&nbsp; Regulators can also ensure the appropriateness of risk-based requirements by moving ahead to update them through the Basel III Finalization process.&nbsp; Doing so would place appropriate emphasis on risk-based, rather than risk-insensitive, capital requirements.&nbsp; &nbsp;

From Backstop to Frontstop: The Leverage Ratio is Becoming the Binding Capital Constraint

BankNotes Blog

Dear reader,&nbsp;Welcome to the seventh edition of The Forum File. In this edition, we are highlighting our members’ work in advancing financial opportunities for women and minority entrepreneurs and business owners, as well as their work in supporting children’s mental health.&nbsp;Thank you for reading and please do not hesitate to share your feedback.&nbsp;Kevin Fromer, President and CEO, Financial Services Forum&nbsp;&nbsp;<h2>Penny For Your Thoughts</h2>&nbsp;<h3>Can you give an overview of the funding gap problem for diverse entrepreneurs?</h3>It’s no secret that a very wide funding gap unfortunately exists for female and diverse founders. The average investment in a typical business startup is nearly $1 million, yet for women and minority-owned businesses that figure drops to just $213,000 and $185,000, respectively. Additionally, investors reported capitalizing multicultural and women-owned businesses at 80% less than businesses overall, and <a href="https://www.morganstanley.com/ideas/trillion-dollar-blind-spot-infographic">our research shows</a> this translates into roughly $4.4 trillion in missed opportunity.And it’s far from a “supply issue” – these diverse founders are out there, but the investment community has chosen to overlook the huge depth and size of this market. I talk through this issue in greater depth on my podcast, <a href="https://www.morganstanley.com/ideas/access-and-opportunity-with-carla-harris">Access &amp; Opportunity</a>, while also highlighting the leaders doing the work to provide solutions and diverse entrepreneurs changing the game.<h3>Tell us more about the Multicultural Innovation Lab.</h3>We at Morgan Stanley are working towards a more equitable funding landscape for women and entrepreneurs of color through our in-house accelerator program, the <a href="https://www.morganstanley.com/about-us/diversity/multicultural-innovation-lab">Multicultural Innovation Lab</a> (MCIL). The MCIL is a 5-month accelerator for technology and technology-enabled startups that targets companies with a multicultural or woman founder, co-founder, CTO or other C-suite in the post-seed to Series A funding rounds. Simply put, the Lab’s mission is nothing less than to transform the investing landscape to be more equitable for diverse founders.In addition to an investment of $250,000 and office space within Morgan Stanley, the founders receive support from a dedicated Morgan Stanley team delivering comprehensive programming across various topics and access to industry leading mentors and connections. The accelerator was launched in 2017 to close the funding gap for diverse entrepreneurs that investors claimed they “couldn’t find.” Since inception the program has expanded so that we now support up to 20 companies annually, with 2 cohorts per year.After four successful years with six cohorts under our belt, the program has proven to be successful as evidenced by resulting company acquisitions and additional funding rounds following participation in the program. And we are continuing to make strides in the fifth year, motivated by our mission of increasing access to capital for diverse entrepreneurs. Highlighting these great companies with diverse founders and leveraging our expansive and global networks and resources will hopefully widen their universe and attract the capital needed to scale.Carla Harris is a Vice Chairman at Morgan Stanley and Co-Head of the Multicultural Innovation Lab. Learn more <a href="https://www.morganstanley.com/what-we-do/inclusive-innovation-and-opportunity?cid=ppc-71700000055408865:700000001808142:58700005226325149:p46130816074&amp;gclid=EAIaIQobChMIprrpiZrr8wIVaHNvBB3_EQxaEAAYASAAEgLBMvD_BwE&amp;gclsrc=aw.ds">here.</a><h2>&nbsp;</h2><h2>Value Add</h2>&nbsp;Member program spotlight&nbsp;<figure class="image image-style-align-center"><img src="https://fsforum.com/a/media/screen-shot-2021-11-03-at-10.31.35-am.png"></figure>&nbsp;COVID-19 and its repercussions have taken a&nbsp;massive toll on children’s mental health, with depression and anxiety in youth already at a two-decade high in February of 2020,&nbsp;<a href="https://www.cdc.gov/childrensmentalhealth/features/anxiety-depression-children.html">according to the CDC</a>. To make matters worse, support for children’s mental health and wellbeing was already severely lacking, especially in vulnerable communities. Now more than ever, we need urgent, coordinated efforts to prevent the existing global crisis in children’s mental health from escalating.For more than 50 years, the&nbsp;<a href="https://www.morganstanley.com/about-us/giving-back">Morgan Stanley Foundation</a>&nbsp;has supported healthy starts and solid education for the children in our communities, and has continued to expand the reach of those initiatives globally for the past 20 years through the&nbsp;<a href="https://www.morganstanley.com/about-us/giving-back">Morgan Stanley International Foundation</a>. Our latest initiative, the&nbsp;<a href="https://www.morganstanley.com/about-us/giving-back/alliance-childrens-mental-health">Morgan Stanley Alliance for Children’s Mental Health</a>, combines the resources and reach of Morgan Stanley with the knowledge and experience of our distinguished nonprofit member organizations to help deliver positive, tangible impact on the critical challenges of stress, anxiety and depression in children, adolescents and young people.This year Morgan Stanley launched the&nbsp;<a href="https://www.morganstanley.com/about-us/giving-back/childrens-mental-health-awards">Morgan Stanley Alliance for Children's Mental Health Innovation Awards</a>, which aims to identify and fund mental healthcare solutions for children and young adults across the United States. The Innovation Awards program specifically addresses the lack of both private and public investment in children’s mental health and the dearth of effective ways to connect innovative ideas with capital. The resulting systemic funding gap has only increased with the deepening crisis in children’s mental health due to COVID-19 and ongoing social injustice issues.&nbsp;Five <a href="https://www.morganstanley.com/press-releases/children-s-mental-health-innovation-awards">winners</a> of the inaugural Innovation Awards were recently selected after a robust review of over 850 applications by mental health and grant-making experts from the Alliance for Children’s Mental Health. They address a diverse set of communities, geographies, and needs through their transformative and culturally responsive models.&nbsp;The selected winners now have the opportunity to showcase their innovative solutions to a broader audience, including other funders, during the Innovation Awards Showcase on November 11, 2021. Learn more about the winners by registering for the virtual Innovation Awards Showcase <a href="https://web.cvent.com/event/6bcf2299-2c6a-43aa-be27-5f14ef8e0c74/websitePage:cca8e178-7412-4c05-84df-d5a52faa76ba?rt=wu_GZCT5O0aT3umK16g1Dw">here</a>. &nbsp;&nbsp;<h2>Capital Gains</h2>What we're doing in WashingtonThe Forum <a href="https://fsforum.com/a/media/fsf-commentsonthird-partyriskmanagementproposal.pdf">submitted</a> a letter to the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) on the proposed interagency guidance on managing risks associated with third-party relationships.The Forum joined other organizations in <a href="https://fsforum.com/a/media/liborjointtradesletter-sbchearing.pdf">requesting</a> a meaningful solution that offers fair, equitable and consistent treatment for all tough legacy contracts in support of the LIBOR transition.Following the release of the Financial Stability Oversight Council’s (FSOC) report on climate-related financial risks and financial stability, the Forum <a href="https://fsforum.com/news/largest-u-s-banks-welcome-efforts-to-advance-climate-change-risk-management">welcomed</a> efforts to advance climate change risk management.<ul><li>Forum members recognize that climate change poses risks to the world’s economy and financial system, as well as offers opportunities to foster innovation and mobilize capital. U.S. GSIBs are undertaking significant efforts to assess and manage climate-related risks and have announced support of the Paris Agreement goals of limiting the increase in global average temperature to well below 2 degrees Celsius above preindustrial levels. Firms are analyzing and developing Paris-alignment strategies to support their clients and the global economy to meet this goal.</li></ul>Learn more about what Forum members are doing to assess and manage risks associated with climate change and their related commitments <a href="https://fsforum.com/our-impact/combatting-climate-change">here.</a>&nbsp;<h2>Our Two Cents</h2>Research from the Forum&nbsp;The BankNotes Blog Spotlighted:<ul><li>A <a href="https://fsforum.com/news/proceed-with-caution-measuring-climate-risks-in-the-banking-sector">review</a> of the Federal Reserve Bank of New York and New York University research paper that attempts to estimate climate risk in the banking sector and discussed some of the conceptual and empirical challenges that are highlighted by this work.</li><li><a href="https://fsforum.com/news/first-things-first-climate-risk-management-and-capital-for-large-banks">Climate change and its relation to large bank capital and risk-management policies.</a> As in the FSOC report, we find that a focus on risk-management, including scenario analysis, is important to address climate-related financial risk.</li><li><a href="https://fsforum.com/news/a-one-way-ratchet-buffers-and-the-covid-pandemic-experience">The large bank buffer regime</a>, the experience with buffers during COVID, the underlying problem with the buffer framework, and implications for the countercyclical capital buffer.</li></ul><h3>&nbsp;</h3><h2>Checking the Balance</h2>Members in the news&nbsp;&nbsp;Bank of America&nbsp;<a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2021/10/bank-of-america-s-community-development-financial-institution-lo.html">announced</a>&nbsp;its current portfolio of loans, deposits and investments to Community Development Financial Institutions (CDFIs) now exceeds $2 billion. This includes approximately $100 million in deposits to Minority Depository Institutions (MDIs) and investments of nearly $36 million of equity in 21 MDIs as part of the firms’ recent&nbsp;<a href="https://newsroom.bankofamerica.com/press-releases/community-development/bank-america-directs-300-million-its-1-billion-four-year">commitment</a>&nbsp;of up to $50 million. These investments build on 25 years of partnership through which Bank of America has provided capital to more than 250 CDFIs across all 50 states and DC.BNY Mellon’s Chief Financial Officer, Emily Portney, was named to American Banker’s annual&nbsp;<a href="https://urldefense.com/v3/__https:/www.americanbanker.com/list/most-powerful-women-in-finance-2021__;!!OiWDNh-9Pw!vbdt4hsvQQaeZ1__1N6vX-vM1NtZ_tDJ-vmikdshaXBBXumauz8Eb1fppjZLcMgqwKoM$">Most Powerful Women in Finance</a>&nbsp;list for the second year in a row, and Chief Audit Executive, Paulette Mullings, was named to its&nbsp;<a href="https://urldefense.com/v3/__https:/www.americanbanker.com/list/women-to-watch__;!!OiWDNh-9Pw!vbdt4hsvQQaeZ1__1N6vX-vM1NtZ_tDJ-vmikdshaXBBXumauz8Eb1fppjZLcB0DmRtb$">Most Powerful Women to Watch</a>&nbsp;list. Additionally, Global Head of Human Resources, Jolen Anderson, and Chief Operations and Technology Officer, Bridget Engle, were&nbsp;<a href="https://urldefense.com/v3/__https:/www.americanbanker.com/list/most-powerful-women-in-banking-standouts__;!!OiWDNh-9Pw!vbdt4hsvQQaeZ1__1N6vX-vM1NtZ_tDJ-vmikdshaXBBXumauz8Eb1fppjZLcMKZh1MZ$">highlighted</a>&nbsp;as standouts in their respective roles.Citi&nbsp;<a href="https://blog.citigroup.com/2021/10/expanding-citis-commitment-to-social-finance/">announced</a>&nbsp;the offering of the inaugural Citi Social Finance Bond, a $1 billion bond that supports social-focused developments in emerging markets around the world. The use of proceeds from the bond will finance a range of projects, including those that expand access to financial services, affordable housing, basic infrastructure, healthcare, and education in underserved and unbanked communities in emerging markets. The bond supports Citi’s $1 trillion&nbsp;<a href="https://blog.citigroup.com/2021/04/citi-commits-1-trillion-to-sustainable-finance-by-2030/">commitment</a>&nbsp;to sustainable finance announced earlier this year, which includes $500 billion for social finance and $500 billion for environmental finance by 2030.Goldman Sachs One Million Black Women&nbsp;<a href="https://www.goldmansachs.com/media-relations/press-releases/2021/ombw-announcement-18-oct-2021.html">announced</a>&nbsp;a partnership and a $1 million commitment to Echoing Green to accelerate the impact of Black women social entrepreneurs through its fellowship program. In partnership with Black women-led organizations, Goldman Sachs&nbsp;<a href="https://www.goldmansachs.com/our-commitments/sustainability/one-million-black-women/index.html">One Million Black Women</a>&nbsp;has committed $10 billion in direct investment capital and $100 million in philanthropic support to address the dual disproportionate gender and racial biases that Black women have faced for generations, which have been exacerbated by the pandemic.JPMorgan Chase&nbsp;<a href="https://www.jpmorganchase.com/ir/news/2021/jpmc-provides-update-on-30-billion-racial-equity-commitment">announced</a>&nbsp;it has deployed or committed more than $13 billion of its&nbsp;<a href="https://www.jpmorganchase.com/news-stories/jpmc-commits-30-billion-to-advance-racial-equity">$30 billion goal</a>&nbsp;to help close the racial wealth gap. The progress is largely driven by homeownership refinancing and affordable rental housing preservation, which were existing products and processes where the firm took immediate action to do more. While noting there is more work to do, the bank has hired more than 20 diverse senior business consultants to provide free one-on-one coaching for business owners in 13 U.S. cities and have mentored more than 900 small business owners so far. JPMorgan Chase has also invested more than $100 million of equity in 14 diverse-owned or -led MDIs and CDFIs that serve more than 87 communities in 18 states and the District of Columbia, among other steps.Morgan Stanley Wealth Management sponsored the&nbsp;<a href="https://blackwealthsummit.com/">Black Wealth Summit</a>&nbsp;with Andy Saperstein, Co-President of Morgan Stanley and Head of Wealth Management and Carla Harris, Vice Chairman and Managing Director, as featured speakers and over 50 Financial Advisors and managers participating.&nbsp;The mission of the summit was to offer the exposure, learning and encouragement needed to make prosperity accessible to Black people through wealth literacy, investment education, networking and mentoring. The summit shared a similar mission with Morgan Stanley’s launch of a&nbsp;<a href="https://www.morganstanley.com/press-releases/morgan-stanley-wealth-management-launches-racial-equity-investin">Racial Equity Investing Tool Kit</a>&nbsp;in May.State Street CEO Ronald O’Hanley and COO Lou Maiuri were named to the&nbsp;<a href="https://clicktime.symantec.com/3S5R175H9xeiXGBYS5tw9Mg6xU?u=https%3A%2F%2Fheroes.involverolemodels.org%2Fpoll%2F2021-top-35-advocates%2F">2021 HERoes Advocate Executives List</a>. This list features executives recognized as champions for women in business through initiatives they have implemented and company culture under their management. Additionally, Yvonne Garcia, Chief of Staff to State Street Chairman and CEO and Global Head of Internal Communications, was named to the&nbsp;<a href="https://clicktime.symantec.com/3LSn2UtYhA1vnbwBWy8LWwT6xU?u=https%3A%2F%2Fheroes.involverolemodels.org%2Fpoll%2F2021-top-100-women-executives%2F">HERoes Women Executives List</a>, and Marion Bentata, Vice President, Leveraged Loans Analyst, was named to the&nbsp;<a href="https://clicktime.symantec.com/33HtpJNc1RpLdjHFZFB2JZ26xU?u=https%3A%2F%2Fheroes.involverolemodels.org%2Fpoll%2F2021-top-100-women-future-leaders%2F">Women Futures Leader List.</a>Wells Fargo was&nbsp;<a href="https://urldefense.com/v3/__https:/climateleadershipconference.org/2021-climate-leadership-award-winners/__;!!F9svGWnIaVPGSwU!-Ye_HyjRKUD_eKuWMt0tzNFZB9ixH6b-ivxL2UqN_VRXLvcxx91cJVcPqWQth59yalrnzlCE7w$">recognized</a>&nbsp;at the 2021 Climate Leadership Awards as a Goal Achievement winner for Excellence in Greenhouse Gas Management. Wells Fargo received this award for its reduction in emissions, improved energy efficiency, and initiatives such as Green Teams that develop business plans for local and business environmental initiatives in line with company-wide goals.

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The Forum File, Edition 7

Dear reader,Welcome to the sixth edition of The Forum File. With this newsletter, we’re focusing on how our members have worked to remove barriers for underserved populations and expand banking services across the country to create a more inclusive economy.We appreciate your readership and hearing your feedback.&nbsp;Kevin Fromer, President and CEO, Financial Services Forum&nbsp;&nbsp;<h2>Penny For Your Thoughts</h2>&nbsp;“For us, it’s about human connection – personalized financial guidance, while also giving our customers the benefit to bank wherever and however they want.”- Jennifer Roberts, Chase Consumer Banking CEO&nbsp;<h3>Chase recently announced that it expanded its retail branches to all 48 states in the contiguous United States, the first of any bank. Can you tell us more about this milestone and how you got there?</h3>In 2018 we committed to expand our branch network to 20 new markets across the U.S. These were markets where we already had a strong customer base, including through our credit cards, or larger client relationships through Commercial or Investment Banking. We knew that the physical retail presence was what was missing, as it would give more customers expanded access to our products, digital tools, and tailored in-branch experiences, like financial advice and financial health workshops.At the time, we had branches in 23 states, and in the first year expanded to large cities like Washington D.C., Philadelphia and Boston. The response locally was incredible, and account openings and performance far exceeded our expectations for branches in new markets. &nbsp;This feedback allowed us to accelerate our expansion to reach all lower 48 states, which is an incredibly important milestone for us. We can now serve millions more customers and businesses across the country, including many communities that have traditionally been underserved, and create thousands of new jobs. As part of our expansion efforts, we’ve hired nearly 2,500 employees to work in our branches, 80% of whom are right from the local community where the branch sits.<h3>Even with the rise in digital banking, especially in the COVID crisis, Chase is still opening branches. What’s the strategy there?</h3>We are big believers in our branches. We see them as community anchors, connecting neighbors and local businesses to the right financial resources to meet their needs.This was especially true during the pandemic. While we saw more customers turn to digital channels to make everyday transactions, they still sought out the branch for in-person advice for help through challenging times – whether it was to discuss a loss of income or supporting their elderly parents. Despite the challenge of the last year, we were still able to open nearly 200 branches across the country from March to December 2020.The difference is that with digital, we need fewer branches in a market than we did five or ten years ago and can serve just as many customers – if not more. Customers can do most of their daily transactions online or through our mobile app, but with branches – which we place in locations based on where customers live, work and shop – we’re able to offer more personalized financial health tips and education.We’re also being more creative with how we think about the customer experience in the branch and bringing together physical and digital channels. We just started testing what we call ‘bank on wheels’ – a 385 square foot truck that has wi-fi, lobby space, private meeting rooms and an ATM that is driving between two towns in rural West Virginia. This format allows us to meet our customers where they are, making banking easier and giving them more choice and convenience, while optimizing how we enter new markets.<h3>What does the future of branches look like at Chase?</h3>You’ll see us continue to innovate for our customers, whether it’s in the branch, through digital and mobile, or new customer channels. The important thing is that we offer customers flexibility and choice so that they bank with us wherever or however they want to, while getting a consistent and seamless experience, no matter the channel.&nbsp;Prior to the pandemic, we began piloting a new channel called virtual banking, a way for Chase customers to establish a relationship with a banker over the phone instead of coming into the branch. This channel has been so important as many customers haven’t been able to leave home, but still value human interaction and advice when it comes to their finances. We also offer customers the ability to schedule meetings – in branch or virtually – including after traditional banking hours to offer more flexibility.And understanding that branches aren’t one-size-fits-all, we’re introducing new formats tailored to local community needs. We recently opened new Community Center branches, including in Stony Island in Chicago and Oak Cliff in Dallas, that offer more space for community events, financial health workshops, and small business pop-ups.For us, it’s about human connection – personalized financial guidance, while also giving our customers the benefit to bank wherever and however they want.<h2>&nbsp;</h2><h2>Value Add</h2>Exploring how to expand the credit box in a safe, responsible and sustainable way&nbsp;<figure class="image image_resized" style="width:75%;"><img src="https://fsforum.com/a/media/chasebankopening.jpg"></figure>&nbsp;Finding new ways to improve how we assess the credit worthiness of the 50 million Americans who lack a credit score is an important challenge for the banking industry, credit bureaus, regulators, legislators, community organizations and technology partners to solve.In our view, making sustainable and responsible progress in this area is beneficial to consumers and the entire financial services industry.To this end, we gladly accepted the invitation from the Office of the Comptroller of the Currency (OCC) to meet with leading thinkers and consider options that would help our industry responsibly expand on traditional definitions of credit worthiness through Project REACh.We are also partnering with Early Warning Services, LLC to build on what we’ve already learned over the last five years and begin expanding the insights we consider for credit decisions to include deposit activity for roughly 700,000 “credit invisible” customers. We look forward to exploring how we can evolve future underwriting models using the alternative data banks provide.We’re beginning with deposit account information and as we gain experience we’ll consider expanding into other areas, such as rent, utilities and other payment information. While we are deliberate about evaluating how to best expand the credit box, we will ensure it is done in a safe, responsible and sustainable way. The stakes are too high to do it any other way.&nbsp;<h2>Capitol Gains</h2>What we’re doing in Washington&nbsp;We <a href="https://fsforum.com/a/media/jointtradesletterinsupportoftheadjustableinterestrate(libor)act.pdf">advocated for the passage</a> of the Adjustable Interest Rate (LIBOR) Act to address “tough legacy” contracts that currently reference London Interbank Offered Rate (LIBOR), which expires in June 2023. This legislation would allow trillions of dollars of hard-to-modify financial contracts, securities, and loans that use LIBOR to either convert to a non-LIBOR rate or be amended to add adequate fallback language.<a href="https://fsforum.com/news/forum-backs-global-standards-for-cryptoasset-regulation">Responding to a proposal </a>from the Basel Committee on Banking Supervision, the Forum and other financial services trade associations welcomed the focus on designing a global prudential framework for cryptoassets. The associations noted the importance of global standards to ensure regulated banks are able to meet the demands of consumers and businesses.The Forum <a href="https://fsforum.com/a/media/jointtradesdebtlimitletter.pdf">joined</a> several other trade associations representing financial institutions of all sizes in a letter fully supporting Congressional efforts to raise the federal debt ceiling without delay. A failure to act would negatively impact the creditworthiness of the United States to the detriment of financial stability and the overall economy, the associations said.In addition, we reiterated that the largest banks in the United States remain strong, well-capitalized and a source of strength during the current global health pandemic, continuing to support American consumers, businesses and communities and a robust, inclusive and sustainable economic recovery.<ul><li>Capital requirements for the eight largest U.S. banks have increased over the past several years—not decreased. On average, regulatory capital requirements – inclusive of buffers – more than doubled from 4.5% in 2015 to 10.6% in 2021.</li><li>Liquidity requirements for the largest U.S. banks have also increased. The 2021 finalization of the Net Stable Funding Ratio further enhanced the stringency of liquidity requirements applied to Forum members.</li><li>The Federal Reserve conducts stress tests of the largest financial institutions in the country at least once a year.&nbsp; As part of this process, the Fed uses a hypothetical economic loss scenario substantially worse than the 2008 financial crisis. While these theoretical losses are substantial, they are consistently a fraction of the capital held by Forum member banks.</li></ul><a href="https://fsforum.com/a/media/regulatoryreality.pdf">Learn more.</a>&nbsp;<h2>Our Two Cents</h2>Research from the Forum&nbsp;The BankNotes Blog Spotlighted:<ul><li>The Forum members <a href="https://fsforum.com/news/ppp-lending-forum-members-come-through-big-for-small-business">continued to focus on providing loans to small businesses</a> as the Paycheck Protection Program extended into 2021, according to data released by the Small Business Administration (SBA).</li></ul>&nbsp;<h2>Checking the Balance</h2>Members in the news&nbsp;<a href="https://urldefense.com/v3/__https:/www.bloomberg.com/news/articles/2021-09-08/bofa-debuts-program-to-move-further-away-from-overdraft-fees?utm_source=google&amp;utm_medium=bd&amp;cmpId=google__;!!I2XIyG2ANlwasLbx!DdlOqk73ztB0buf7L97LnTl2J37y9xdy9mVlQkwGl3yTILoimRrw6vtSnoJJaLZmyQ$">Bloomberg recently reported</a> on Bank of America’s new overdraft protection program Balance Connect, which allows consumer and small business clients to link their checking account to up to five other Bank of America accounts. The firm also <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2021/09/bank-of-america-safebalance-banking-surpasses-three-million-clie.html">announced</a> that over three million clients now use&nbsp;SafeBalance Banking, an account that has no overdraft fees and helps clients manage their day-to-day finances. The company’s&nbsp;Balance Assist product, which&nbsp;became available nationally in March, will soon surpass 100,000 loans. The program offers an affordable way for eligible clients to manage their short-term liquidity needs.BNY Mellon announced that several of its employees were recognized for their contributions to gender diversity in the workplace by being named to the <a href="https://www.bnymellon.com/us/en/about-us/newsroom/company-news/bny-mellon-leaders-recognized-on-2021-heroes-women-role-model-lists.html">2021 HERoes Women Role Model Lists</a>. The lists recognize female and male leaders who elevate female talent and encourage diversity in the workplace. The bank was also named one of <a href="https://www.bnymellon.com/us/en/about-us/newsroom/company-news/bny-mellon-named-to-fast-companys-100-best-workplaces-for-innovators.html#:~:text=BNY%20Mellon%20has%20been%20named,across%20a%20variety%20of%20industries.">Fast Company’s Best Workplaces for Innovators for 2021</a>. This annual list recognizes the top 100 businesses that inspire, support and promote innovation at all levels. BNY Mellon was specifically recognized for its investments in infrastructure to support innovation.<a href="https://www.citigroup.com/citi/news/2021/210811a.htm">Citi announced the launch</a> of Bridge built by Citi, a new lending platform that helps small and medium-sized businesses connect with various regional, local and community banks online for loans up to $10 million. The development and launch of Bridge built by Citi is part of the company’s long-standing commitment to inclusive access to capital and support of innovative, digital-first solutions in financial services.<a href="https://www.wsj.com/articles/goldman-sachs-other-financial-firms-back-program-to-diversify-wall-street-11628764200">The Wall Street Journal covered</a> Goldman Sachs’ partnership with The City University of New York and a pair of other financial firms to create CUNY Futures in Finance, a comprehensive workforce development initiative to cultivate and train CUNY students for careers in the financial industry. The initiative will launch at three CUNY colleges and plans to expand to more schools over time. The funding will provide internship opportunities, career-development staff and help with post-college hiring.JPMorgan Chase <a href="https://www.jpmorgan.com/news/supporting-servicemembers-and-afghan-resettlement-efforts">committed $1 million</a> to supporting servicemembers and veterans, and to aid Afghans seeking better lives.&nbsp;Through contributions to&nbsp;Blue Star Families and&nbsp;Iraq and Afghanistan Veterans of America, the firm will support mental health care and other services for those in military and veteran communities who have been touched by the conflict, including the bank’s employees and families. The firm is supporting resettlement for Afghans through contributions to the&nbsp;International Rescue Committee.Morgan Stanley through its Alliance for Children’s Mental Health launched a <a href="https://www.morganstanley.com/articles/reemergence-program-teens-mental-health">Reemergence Program</a> to provide support and resources for families and educators addressing children’s mental health issues leading up to the 2021-2022 school year. This multi-faceted program aims to help teens re-engage with school and their daily activities. Key components of the program include a&nbsp;<a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fwww.morganstanley.com%2Fassets%2Fpdfs%2Freemergence-program-teen-survey-factsheet.pdf&amp;esheet=52485988&amp;lan=en-US&amp;anchor=national+survey+of+U.S.+teens&amp;index=3&amp;md5=53a87eec6c71cf20d2dc5a8150763844">national survey of U.S. teens</a> and <a href="https://www.morganstanley.com/press-releases/educators-anticipate-impact-to-school-year-from-student-mental-h">high school educators</a>,&nbsp;<a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fwww.morganstanley.com%2Fassets%2Fpdfs%2Freemergence-program-educator-tips-english.pdf&amp;esheet=52485988&amp;lan=en-US&amp;anchor=tip+sheets&amp;index=4&amp;md5=ae8770af1b99513b42c0be575dca443a">tip sheets</a>, digital resources and a convening for educators.State Street was named to <a href="https://www.workingmother.com/2021-seramount-inclusion-index-organizations">Seramount's 2021 Inclusion Index</a> for the financial institution’s commitment to advancing diversity, equity and inclusion in the workplace. Additionally, the bank’s Latin American Professional Network was named a Top 25 Employee Resource Group by the Association of ERGs &amp; Councils.&nbsp;Wells Fargo is <a href="https://newsroom.wf.com/English/news-releases/news-release-details/2021/Wells-Fargo-Helps-Keep-People-Housed-through-Nearly-11-Million-Grants-to-19-Nonprofits/default.aspx">providing nearly $11 million</a> in additional grant funding to seven legal-assistance organizations and 12 housing counseling agencies to help keep people housed as millions face housing and rental instability due to the COVID-19 pandemic. Funding will provide urgent housing counseling and legal assistance services to help more than 250,000 people stay in their homes.

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The Forum File, Edition 6

Dear reader,Welcome to the fifth edition of the Forum File. This issue, we are highlighting how our members are fulfilling their commitments to create a more equitable and inclusive economy as we continue to recover from the pandemic.Thanks for reading, and don’t hesitate to share your thoughts.Kevin Fromer, President and CEO, Financial Services Forum&nbsp;<h2>Penny For Your Thoughts</h2>“We are listening to our employees and know how deeply concerned they are about the ongoing challenges facing their communities and society as a whole. They want to contribute and be part of an organization committed to driving positive change.” – Jolen Anderson, Global Head of Human Resources and Global Impact Citizenship at BNY Mellon<h3>How is BNY Mellon investing in the people and communities it operates in?</h3>It’s hard to categorize all the ways the global pandemic has changed our society, but two substantial areas it has highlighted is the need to continue to digitize the processes and programs we all rely on and the even more urgent need for us all to address widespread racial, social, economic, and health-related disparities. As we have considered our giving strategy following the pandemic, we’ve recognized the incredible opportunity of combining these two areas (people and community) to ensure all communities have access to the digital economy.In pursuit of this idea, we are supporting efforts that educate, train, and develop traditionally underrepresented communities in the business and advanced technology fields. Especially young people will need to possess critical, foundational technical skills, soft skills, and relevant work experience to maximize their potential in the future economy. At the same time, others need support reskilling and upskilling.<h3>What steps are BNY Mellon taking to support the education and training underserved communities need to truly access the future digital economy?</h3>A core part of BNY Mellon’s philanthropic efforts and overarching philosophy around employee volunteerism is a commitment to developing a workforce for the future – one that is equipped to meet the demands of a technologically-driven society.In the past year, we’ve taken critical steps to support this goal. In 2020,<a href="https://www.bnymellon.com/us/en/about-us/newsroom/company-news/bny-mellon-commits-20-million-to-fund-the-future-workforce.html"> we made a $20 million, multiyear commitment</a> to academic and job training organizations for educational and workforce development programming. Building on our existing workforce initiatives, we are investing in the educational success of underserved populations, upskilling and reskilling members of the communities we work in. Specifically, this commitment includes $10 million to City University of New York (CUNY), a long-standing grantee for BNY Mellon, to underwrite the launch of the NYC Future of Work Initiative to further expand the BNY Mellon Transfer Scholarship Program. We also committed $5 million to the Community College of Allegheny County (CCAC) to establish the BNY Mellon Early College in High School program.&nbsp;The remaining $5 million of our Future of Work commitment includes investment in additional workforce training to better equip individuals with skills, experience, qualifications and access to a tightening labor market through 2022.<h3>What other strategies is BNY Mellon pursuing to ensure positive, impactful change?</h3>Beyond our efforts to support our Future of Work initiative, we are also Committed to Putting the <a href="https://www.bnymellon.com/us/en/about-us/esg-and-responsible-investment.html">Future First</a> by powering a new era of ESG. BNY Mellon is committed to using our reach, market influence and resources to help address a variety of pressing global environmental, social and governance (ESG) issues. We aim to accelerate the evolution of ESG—on behalf of clients, investors, communities and all the stakeholders—to make a positive impact on people and the planet.With our size, scale and significance at the heart of the financial system, we touch many points along the financial value chain-giving us an unparalleled view of the continuous shifts in ESG. We're uniquely positioned to collaborate with clients to drive transparency, insight and impact.Recently, we published our <a href="https://www.bnymellon.com/content/dam/bnymellon/documents/pdf/insights/considering-climate-at-bny-mellon.pdf.coredownload.pdf">Considering Climate Report </a>which clearly and publicly outlines our approach and commitment as a global financial institution to sustainability and combatting climate change.We also hosted the <a href="https://futurefirstforum.bnymellon.com/?cid=ALL_OSM_XC003275_Week430secpromoTwitter_ALLSEG_PUB_GL_TWT_BRN__DV__">Future First Forum</a> to help foster a larger conversation about what our industry and others can do to develop meaningful ESG strategies and share ideas that help us all truly safeguard the future.<h2>&nbsp;</h2><h2>Value Add</h2>Community Impact, Skills-based volunteering, and signature pro-bono program<figure class="image image_resized" style="width:100%;"><img src="https://fsforum.com/a/media/screen-shot-2021-07-28-at-12.13.47-pm.png"></figure>Since the launch of our Community Impact Program in 2008, BNY Mellon employees volunteered nearly 1.3 million hours valued at approximately $25 million.Skills-based volunteering leverages the company’s greatest asset — our employees’ knowledge and expertise — and opens opportunities to make an impact on society. In this regard, 2020 was no exception. Despite the lockdowns and restrictions on in-person activities, employees from 16 countries continued to volunteer in 2020.Many volunteer projects pivoted to virtual volunteering, totaling more than 54,000 hours to serve a variety of important causes and organizations.This included activities such as virtual mentoring with underrepresented high school students, coaching young first-generation-to-college entrepreneurs, and providing strategic advising to non-profits through the Signature Pro Bono Program.Through pro bono volunteering, we leverage the talent of our employees to increase the nonprofit sector’s capacities in our communities. In fact, since 2017, the Signature Pro Bono Program has provided critically needed capacity-building support in areas such as finance, technology and marketing to a number of non-profit organizations. BNY Mellon employees delivered nearly 3,000 hours of corporate and legal pro-bono services, valued at over $500,000 in 2020. Additionally, 100% of participants reported that the experience allowed them to develop professionally and that they would participate again.&nbsp;<h2>Capitol Gains</h2>What we're doing in WashingtonAs seen in <a href="https://fsforum.com/news/op-ed-strength-of-large-u-s-banks-means-it-s-time-to-rely-on-rigorous-capital-distribution-process">Morning Consult</a>, we supported the full return to the government’s normal capital distribution oversight process. U.S. Global Systemically Important Banks are strong and resilient. In fact, in the second most recent stress test, the average post-stress capital ratio for our members was 9.7 percent—more than twice the minimum requirement of 4.5 percent.In addition, we have been highlighting Forum members’ commitments to addressing racial and economic inequities through:·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Significant contributions to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) with $9 billion in investments in CDFIs and $500 million into MDIs.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing the creation or preservation of more than 158,000 affordable housing units in 2020.&nbsp;·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Improving representation in the workplace by increasing diversity among Forum member professional employees, managers, and executives from 2018 to 2020.Learn more <a href="https://fsforum.com/a/Supporting_Workforce_Diversity_a4bf164240/Supporting_Workforce_Diversity_a4bf164240.pdf">here</a>.&nbsp;<h2>Our Two Cents</h2>Research from the ForumThe BankNotes Blog Spotlighted:·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <a href="https://fsforum.com/news/large-bank-resilience-and-the-stress-tests">Results of this year’s stress test</a> released by the Federal Reserve, showing Forum members maintained more than double the regulatory minimum capital ratio. Even if stress losses were increased by 50 percent, Forum members would still maintain a capital ratio well in excess of the minimum.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <a href="https://fsforum.com/news/changing-realities-and-financial-regulation-the-changing-nature-of-short-term-wholesale-funding">New research</a> from economists at the Federal Reserve Board and the University of Chicago demonstrating that the role played by short-term wholesale funding in the banking system has changed significantly over the past decade.·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <a href="https://fsforum.com/news/pistons-or-sparkplugs-how-large-banks-and-governments-work-together-to-support-the-economy">Large banks coexist alongside government</a> in our economy and our modern economy can’t operate productively or efficiently without contributions from both.&nbsp;<h2>Checking the Balance</h2>Members in the newsBank of America announced grant funding for <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2021/06/bank-of-america-announces-2021-art-conservation-project-grant-se.html">23 major art restoration projects</a> in 13 countries and nine U.S. cities through the 2021 Bank of America Art Conservation Project. The firm is celebrating a decade of providing grant funding to nonprofit cultural institutions throughout the world to conserve historically or culturally significant works of art that are in danger of deterioration. The bank further showed its dedication to the arts by announcing a <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2021/07/bank-of-america-awards--1-million-dollar-grant-to-cleveland-s-ka.html">$1 million dollar anchor grant</a> to Karamu House, the oldest African American producing theatre in the United States.BNY Mellon earned a <a href="https://www.bnymellon.com/us/en/about-us/newsroom/company-news/bny-mellon-named-to-2021-disability-equality-index.html">100% on the Disability Equality Index</a> for 2021 and was recognized by the American Association of People with Disabilities and Disability:IN as a Best Place to Work for its disability inclusion practices and policies. HEART, BNY Mellon’s Employee Resource Group for Diverse Abilities, helps support work that elevates awareness of disabilities and promotes a safe, respectful and welcoming environment.<a href="https://urldefense.com/v3/__https:/www.bloomberg.com/news/articles/2021-07-21/citigroup-traders-bankers-vie-to-do-stints-at-black-owned-banks__;!!Jkho33Y!w8NN97EHACTtWgbbvwStb2UfHWVehWR5zvsjptN3moUX4xEFRzFS2yb6Cx4ovGI$">Bloomberg reported</a> Citi’s new mentorship program which allows senior executives to spend time working at black owned banks and help the minority depository institution (MDIs) shore up operations or establish new lines of business as part of the firm’s efforts to mentor and offer long-term revenue growth opportunities to the country’s dwindling MDIs. In addition to these recent efforts, Citi has provided $50 million to half a dozen such banks as part of a broader $1 billion commitment to closing the nation’s wealth gap.Goldman Sachs announced the <a href="https://www.goldmansachs.com/media-relations/press-releases/2021/ombw-first-round-of-capital-and-philanthropic-grants.html">initial grants and investments</a> for the One Million Black Women initiative, which has committed more than $10 billion to advance racial equity and economic opportunity by investing in Black women. Investment capital and philanthropic grants will provide organizations funds to advance causes including expanding broadband access, increasing access to financial coaching, providing affordable housing, decreasing maternal mortality rates, and more.JPMorgan Chase announced new steps <a href="https://www.forbes.com/sites/brendarichardson/2021/06/24/chase-commits-400-million-toward-closing-the-housing-affordability-gap/?sh=73196881b95f">to improve housing affordability and stability</a> as well as affordable homeownership opportunities for Black and Latinx households. As part of its $30 billion commitment to racial equity, a new five-year, $400 million philanthropic commitment will focus on housing stability, affordability and wealth creation. The firm also announced new efforts to advance federal housing policies that help mitigate bias in the home appraisal process such as promoting equal access to valuation data and improved appraisal process techniques. JPMorgan Chase is also providing mentors for trainees in the Appraiser Diversity Pipeline Initiative, an initiative led by the Appraisal Institute and Fannie Mae to attract new people in the field and increase diversity in the industry.Morgan Stanley awarded <a href="https://www.morganstanley.com/press-releases/usd21-7-million-award-to-opportunity-finance-network">$21.7 million in funding</a> to Opportunity Finance Network to support human capital and professional development for the Community Development Financial Institution (CDFI) network, and to make pass-through grants to CDFIs in amounts of $100,000 - $250,000. These grants are designed to help CDFIs increase their lending capacity to the communities they serve. Mission-driven CDFI grant recipients will support economic recovery and growth, especially in Black, Latinx, Native, and rural communities.State Street recently announced strategic <a href="https://clicktime.symantec.com/3JcbZHHReBsX153wiAcXSK37Vc?u=https%3A%2F%2Finvestors.statestreet.com%2Finvestor-news-events%2Fpress-releases%2Fnews-details%2F2021%2FState-Street-Announces-Strategic-Engagements-with-Industry-Groups-to-Increase-Representation-of-Black-and-Latinx-Talent-in-the-Asset-Management-Industry%2Fdefault.aspx">engagements with leading industry and education-focused organizations</a>that support the advancement of Black and Latinx professionals in financial services. Aligned with the firm’s 10 Actions to address racism and inequality in the workplace and communities and as part of its commitment to combating racial inequities within the global asset management industry, State Street will work with four organizations to provide career exploration; inclusion, diversity and equity best practices; employment; and professional development opportunities.Wells Fargo provided <a href="https://newsroom.wf.com/English/news-releases/news-release-details/2021/Opportunity-Finance-Network-Receives-Largest-Grant-in-35-Year-History-from-Wells-Fargo/default.aspx">a $25 million grant</a> to Opportunity Finance Network’s (OFN) <a href="https://ofn.org/finance-justice-fund">Finance Justice Fund</a> to assist in tackling systemic barriers to capital in communities around the country. The Finance Justice Fund aims to address the racial wealth gap and persistent poverty by delivering financing through CDFIs to communities with less access to traditional financial services. The firm also awarded $1 million in grants to four organizations to provide <a href="https://newsroom.wf.com/English/news-releases/news-release-details/2021/Wells-Fargo-Awards-1-Million-to-Assist-Asian-American-and-Pacific-Islander-Communities/default.aspx">support for the Asian American and Pacific Islander community</a> and small businesses. The funding is in response to the COVID-19 pandemic and the recent increase in anti-Asian hate, discrimination and violence.&nbsp;

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The Forum File, Edition 5

The Forum File

CONTACT: Barbara Hagenbaugh(202) 457-8783bhagenbaugh@fsforum.com&nbsp;&nbsp;Largest banks lead the way in offering low-cost, no overdraft accountsWashington, D.C. - Financial Services Forum President and CEO Kevin Fromer issued the following statement today following a report from the Consumer Financial Protection Bureau (CFPB) on overdraft:“The nation’s largest banks have led the way in offering low-cost checking accounts with no overdraft fees and ensuring banking services are transparent, accessible and understandable.“The largest banks generate a small portion of their overall revenue from overdraft fees and in 2020 waived hundreds of millions of dollars in overdraft fees for customers affected by COVID-19. Financial Services Forum members offer overdraft protection for customers who opt in and encourage customers to receive low-fund alerts via text and/or email when their account balances fall below a certain dollar amount so that they do not overdraft their accounts. They also have introduced additional consumer benefits, such as grace periods and small, short-term loans and other alternatives to the traditional overdraft model.”&nbsp;###BackgroundIn an article in Politico, “<a href="https://www.politico.com/news/agenda/2021/06/24/bank-overdrafts-big-business-small-banks-495688">Overdraft Fees Are Big Money for Small Banks</a>,” former Treasury Department official Aaron Klein said his research has shown that overdraft accounts for a small percentage of total profit at large banks. Indeed, he said “a handful of smaller banks are the true overdraft giants” and pointed to some small banks who make nearly all of their profits from overdraft fees. “These banks are running a business model more akin to a check casher than a bank,” said Klein, now a senior fellow in economic studies at the Brookings Institution.<figure class="image"><img src="https://fsforum.com/a/media/screen-shot-2021-12-01-at-11.22.41-am.png"></figure>According to a <a href="https://curinos.com/insights/competition-drives-overdraft-disruption/">new study</a> from Curinos, a majority of consumers said they see benefit in overdraft and nearly two-thirds of respondents indicated that triggering an overdraft payment was a conscious choice. The study also found that regular overdraft use fell 40 percent from 2010 to 2020 and that bank-led initiatives aimed to help consumers avoid unintended fees have dramatically reduced the number of small purchases tied to overdraft.&nbsp;The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States.&nbsp; Forum member institutions are a leading source of lending and investment in the United States and serve&nbsp;millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, financial inclusion, a competitive global marketplace, and a sound financial system. Visit our website: <a href="http://www.fsforum.com/">fsforum.com</a>Follow us on Twitter <a href="https://twitter.com/fsforum">@fsforum</a> and <a href="https://www.linkedin.com/company/financial-services-forum/">LinkedIn</a>

Financial Services Forum Statement on Overdraft Report

CONTACT: Barbara Hagenbaugh(202) 457-8783bhagenbaugh@fsforum.com&nbsp; Largest banks expect to continue to be held to the highest standardsWashington, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today after President Biden announced his decision to renominate Federal Reserve Chairman Jerome Powell and to nominate Dr. Lael Brainard as Fed vice chair:“We congratulate Chairman Powell and Gov. Brainard and look forward to continuing to work with them. The largest banks in the United States are strong, well-capitalized and have been a key source of support for American households, businesses, and communities during the pandemic and recovery. We expect regulators will continue to hold the largest banks to the high regulatory and supervisory standards that have remained in place to support a resilient and essential part of the U.S. financial system.”&nbsp;&nbsp;###&nbsp;BackgroundGlobal Systemically Important Banks, or GSIBs, are subject to the highest regulatory and supervisory standards. These standards, which were put in place more than a decade ago, have been maintained or strengthened in recent years. Capital requirements for these banks have more than doubled from 2015 to 2021. Liquidity requirements have increased. And the Federal Reserve continues to conduct rigorous stress tests – using hypothetical scenarios far worse than the financial crisis -- to ensure the largest banks hold enough capital to be able to continue to lend and remain strong even in the face of significant headwinds.&nbsp;Learn more about the robust regulatory and supervisory standards for U.S. GSIBs <a href="https://fsforum.com/a/media/regulatoryreality.pdf">here</a>.&nbsp;&nbsp;The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States.&nbsp; Forum member institutions are a leading source of lending and investment in the United States and serve&nbsp;millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, financial inclusion, a competitive global marketplace, and a sound financial system. Visit our website: <a href="http://www.fsforum.com/">fsforum.com</a>Follow us on Twitter <a href="https://twitter.com/fsforum">@fsforum</a> and <a href="https://www.linkedin.com/company/financial-services-forum/">LinkedIn</a>

Financial Services Forum Welcomes Nominees for Federal Reserve Leadership

CONTACTS:Tara Paynetara.payne@bpi.com&nbsp;Barbara Hagenbaughbhagenbaugh@fsforum.com&nbsp;BPI, FSF Support Bill to Enhance Bank Employment Opportunities for Rehabilitated Job SeekersWashington, D.C. — The Bank Policy Institute and the Financial Services Forum today in a <a href="https://fsforum.com/a/media/bpi-and-fsf-letter-to-hfsc-on-section-19.pdf">letter</a> to the House Financial Services Committee expressed support for legislation enabling banks to offer more job opportunities to rehabilitated people with prior criminal offenses. The Fair Hiring in Banking Act would update a federal law to exempt certain job applicants from bank hiring restrictions, allowing banks greater flexibility in hiring rehabilitated individuals.“This legislation is an important measure that, if adopted, would increase economic opportunities for affected individuals,” the trades said in the letter. “The statute’s goal of ensuring a trustworthy, reliable banking workforce is important, particularly for an industry built on trust. However, safeguarding that trustworthiness should not come at the expense of offering hardworking people the chance to achieve meaningful employment opportunities in our nation’s banks.”The measure would exempt certain banking job seekers – namely those with older or very minor offenses or ones that occurred before the age of 21 – from hiring restrictions that require banks to seek FDIC approval to employ them. The legislation would not compel banks to employ individuals with any criminal record, however minor, but allows them the ability to extend such opportunities where appropriate without the additional step of seeking FDIC approval.&nbsp;###&nbsp;About Bank Policy InstituteThe Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.About The Financial Services ForumThe Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of 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, deep and liquid capital markets, financial inclusion, a competitive global marketplace, and a sound financial system.&nbsp;

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The Forum supports proposals that would require public companies to annually disclose the gender, race, ethnic, and veteran status of their boards of directors, nominees, and senior executives. Diversity of corporate boards is an area of focus for our institutions and is critically important to investors and other stakeholders.

Board diversity ensures representation of differing experiences and perspectives and allows for unique approaches to solve complex problems. Our members recognize that board diversity bolsters competitiveness around the world, helps foster a sustainable and inclusive economy, and leads to better results for consumers, clients, and communities.


Diversity, Equity and Inclusion

BPI, FSF Support Bill to Enhance Bank Employment Opportunities for Rehabilitated Job Seekers

Press Releases

This op-ed was featured in <a href="https://morningconsult.com/opinions/strength-of-large-u-s-banks-means-its-time-to-rely-on-rigorous-capital-distribution-process/">Morning Consult</a>.&nbsp;<h3>By Kevin Fromer</h3><blockquote>Later this week, the Federal Reserve will issue results of its latest round of stress tests, offering an update on the health and safety of the largest banks in the country. This assessment marks the third round of stress tests the government has conducted in a year to measure the capital adequacy of large U.S. banks.</blockquote>These results will herald the full return to the government’s normal capital distribution oversight <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210325a.htm">process</a>, which was halted in 2020 due to the uncertain economic effects of the pandemic. Given the strength of the nation’s largest banks and the rapid improvement in the economy, it is clearly time to rely on the established and rigorous regulatory process, which allows banks to return excess capital to investors across the country. This return to regular order will support the economy as we build a strong, inclusive recovery.Capital distributions are expected by investors in any large corporation. Companies in a variety of&nbsp;<a href="https://www.wsj.com/articles/companies-are-flush-with-cashand-ready-to-pad-shareholder-pockets-11621157406">industries</a>&nbsp;routinely distribute portions of their earnings to investors — it is how American companies attract investment so that they can grow, create jobs, expand services and better support the economy.Despite what critics would have you believe, the capital distribution process is not a zero-sum game. Share distributions&nbsp;<a href="https://finance.yahoo.com/news/tax-cuts-fuel-stock-buyback-spike-130545937.html?acid=twitter_yfsocialtw_l1gbd0noiom&amp;ncid=twitter_yfsocialtw_l1gbd0noiom&amp;guccounter=1">complement</a> — not replace — the investments that banks make in their communities, workers, operations and businesses. Only safe and highly capitalized banking institutions can even consider buybacks or dividends.What’s more, unlike every other industry, large financial institutions face higher regulatory scrutiny and approval to buy back shares or to issue dividends.This year, large banks must pass a strenuous stress test to demonstrate they maintain a strong capital position and can support the economy, even during a significant downturn. They must further satisfy several different regulatory capital&nbsp;<a href="https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20200304a2.pdf">requirements</a>&nbsp;each quarter to continue making planned buybacks and dividends. Then, and only then, are banks able to distribute capital.In the most recent test, which the Federal Reserve completed in&nbsp;<a href="https://www.federalreserve.gov/publications/files/2020-dec-stress-test-results-20201218.pdf">December</a>, the average post-stress capital ratio for the U.S. Global Systemically Important Banks was 9.7 percent, significantly larger than that of other U.S. banks subject to the stress tests and more than twice the minimum requirement of 4.5 percent.The largest U.S. banks entered the global pandemic in a strong position and they acted quickly to&nbsp;<a href="https://fsforum.com/our-impact/covid-19-response">support</a>&nbsp;customers, small businesses, employees and the communities in which they operate. They also&nbsp;<a href="https://fsforum.com/news/financial-services-forum-statement-on-share-buybacks">suspended</a>&nbsp;their share buybacks — which account for the majority of their capital distributions — and aggressively reserved for potential losses. Importantly, large banks’ strength and scale allowed them to significantly support the economy.In 2020, the nation’s largest banks increased their provision of&nbsp;<a href="https://fsforum.com/a/Credit_ad3853a06e/Credit_ad3853a06e.pdf">credit</a>&nbsp;by 10 percent, helping families, small businesses, large employers and the government. They accepted a massive surge in deposits and facilitated loans to nearly 850,000&nbsp;<a href="https://fsforum.com/a/COVID_19_Response_b55baf7fc3/COVID_19_Response_b55baf7fc3.pdf">small businesses</a>&nbsp;through the Paycheck Protection Program. They also committed significant resources to communities across the country, creating or preserving more than 158,000 affordable&nbsp;<a href="https://fsforum.com/a/Committed_to_Affordable_Housing_2021_4c59c48264/Committed_to_Affordable_Housing_2021_4c59c48264.pdf">housing</a>&nbsp;units, and supported their nearly 758,000 employees by giving them extra time off, paying for child and elder care and providing economic incentives.The largest banks have also been strong&nbsp;<a href="https://fsforum.com/our-impact/supporting-underserved-communities">supporters</a>&nbsp;of historically underserved communities. In addition to the work they are doing to promote lending in minority neighborhoods, they are investing in mission-driven financial institutions so that they can succeed and serve diverse and low- and moderate-income communities. From 2015 to 2020, the largest banks&nbsp;<a href="https://fsforum.com/a/cdfifactsheetfinal2021_861e28ce56/cdfifactsheetfinal2021_861e28ce56.jpeg">invested</a>&nbsp;$9 billion in Community Development Financial Institutions, and they have also&nbsp;<a href="https://fsforum.com/a/MDI_One_Pager_6a4a12345f/MDI_One_Pager_6a4a12345f.pdf">committed</a>&nbsp;more than $500 million to Minority Depository Institutions, in some cases investing directly in the MDIs to support their long-term wellbeing.The largest banks are committed to supporting their employees and the communities they serve. These institutions can and will continue to provide this support while distributing&nbsp;capital.It’s important to remember that the benefits of buybacks and dividends to the economy go far beyond the shareholders. More than half of all U.S. households own stocks, either directly&nbsp;or indirectly, according to the&nbsp;<a href="https://www.federalreserve.gov/econres/scfindex.htm">Federal Reserve</a>. Moreover, stock holdings are most concentrated among households headed by a retiree and dependent on dividends to meet their financial needs. Therefore, money returned to shareholders recirculates throughout the economy.&nbsp;It is our banks’ responsibility to those teachers, first responders, veterans and small businesses who invest in them to always use capital in the highest and most efficient way possible.As Federal Reserve Chairman Jerome Powell&nbsp;<a href="https://www.govinfo.gov/content/pkg/CHRG-115shrg32517/pdf/CHRG-115shrg32517.pdf">said</a>: “When a company buys back its shares or pays higher dividends, the resources do not disappear. Rather, they are redistributed to other uses in the economy. For instance, shareholders may decide to invest the windfall in another company, which may in turn make productivity-enhancing investments. Or they may decide to spend the windfall on goods and services that are produced by other companies, who may in turn hire new workers. In these ways, stock repurchases would also be likely to boost economic growth.”The nation’s largest banks are committed to serving our country and to building an economic recovery that supports everyone. They have been through a real-life stress test during the past year and have shown that they are safe, strong, and are a key source of support for the economy. Government oversight of share distributions by the largest U.S. banks is rigorous, and ensures the continued strength of the financial system. The fact that banks have such excess capital to reinvest in the form of buybacks and dividends is a promising sign for the economy. It is now time to rely upon a normal process of assessing our institutions, and ensuring that they may support a durable, inclusive recovery.&nbsp;Kevin Fromer is president and CEO of the Financial Services Forum, which represents the eight largest, most diversified U.S. banking institutions, and previously served as&nbsp;the Assistant Secretary of the Treasury for Legislative Affairs from 2005 to 2009.&nbsp;

Op-ed: Strength of Large U.S. Banks Means It’s Time to Rely on Rigorous Capital Distribution Process

This op-ed was featured in <a href="https://www.americanbanker.com/opinion/capital-relief-is-good-for-big-banks-and-the-economy">American Banker's BankThink</a>.&nbsp;<h3>By Sean Campbell</h3><blockquote>The nation’s largest banks have been instrumental in supporting the economy through the coronavirus pandemic, providing vital assistance to consumers and businesses and facilitating critical financing from government programs.To ensure the banking industry can be a key source of support during the crisis, regulators rightly made temporary and targeted adjustments to certain regulations.</blockquote>Yet, some critics including in a recent&nbsp;<a href="https://www.americanbanker.com/opinion/dont-weaken-the-g-sib-surcharge">BankThink</a>&nbsp;op-ed, have shown a clear misunderstanding of big bank capital levels and the objective of the Federal Reserve in navigating one of the most serious economic crises to ever hit the U.S. and global economy.The author argues that regulators “gutted” large bank capital by temporarily excluding deposits at the Federal Reserve and U.S. Treasuries from the supplementary leverage ratio’s (SLR) risk-insensitive measure of total exposure, which determines the amount of capital required by the SLR. A few points should be noted in response.First, regulators have long held that risk-insensitive leverage capital requirements are intended to be a backstop to risk-based capital requirements. Prior to the crisis, the minimum capital requirement for a risk-based capital measure, called Tier 1, was 4% of risk-weighted assets. Today, that minimum stands at 6%, a 50% increase.What’s more, over the past decade banks have significantly improved both the quality and quantity of capital maintained. Financial Services Forum members, for instance, have grown their capital base by&nbsp;<a href="https://fsforum.com/a/forum_value_and_resiliency_2020q1_1_f835ef3ee5/forum_value_and_resiliency_2020q1_1_f835ef3ee5.pdf">$260 billion</a>&nbsp;and substantially raised capital levels as a proportion of the risk-weighted asset base.Regulators rightly made a temporary change to the SLR standard in the pandemic to help ensure that risk-insensitive leverage requirements do not move to the fore and become the binding capital constraint. This would further distress capital markets and the ability of banks to provide credit to businesses and households during an unprecedented economic disruption.Second, large banks are currently bound by the Federal Reserve’s new capital policy announced in late June with this year’s stress test results. All large banks are prohibited from making any share repurchases through the third quarter and dividend payouts are frozen at previous levels.Accordingly, it is hard to understand how large bank capital will decline significantly as the Federal Reserve has actively taken steps requiring banks to conserve capital. These measures outweigh any potential impact that the temporary change to the SLR could have.Some critics also maintain that the finalization earlier this year of the&nbsp;<a href="https://www.americanbanker.com/news/fed-finalizes-new-capital-buffer-ahead-of-2020-stress-tests#:~:text=The%20final%20SCB%20%E2%80%94%20which%20the,severely%20adverse%E2%80%9D%20stress%20test%20scenario.">stress capital buffer (SCB) rule</a>&nbsp;— which was first introduced during the Obama administration and ties large bank capital requirements to stress testing — somehow represents a big bank giveaway.Yet the Federal Reserve’s&nbsp;<a href="https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20200304a1.pdf">analysis</a>&nbsp;showed that the SCB will have the effect of raising capital for global-systemically important banks (G-SIBs) by roughly $46 billion on average, while at the same time lowering capital requirements for smaller banks. Given that the analysis shows the SCB final rule raises capital for G-SIBs, it is difficult to understand how one would assert that the SCB represents a weakening of the large bank capital regime.Also, this year the Fed opted not to set bank capital distribution policy with regard to the SCB. Rather, the Fed is using a new “sensitivity analysis” to determine bank capital distributions.This year’s sensitivity analysis found that 75% of all large banks subject to the stress tests — a universe that goes well beyond the G-SIBs — would maintain capital levels above the minimum requirement.In the parlance of the previous stress testing regime, most banks actually passed the stress tests, but are still being required to conserve capital per the Fed’s new capital distribution policy. Accordingly, the suggestion that somehow large banks are either not well-capitalized or are shedding capital simply does not add up.All of the capital modifications announced by the Fed are temporary and explicitly designed to deal with the coronavirus crisis to help ensure that banks of all sizes can continue to support the economy in this time of great need.<blockquote>Data and existing research convincingly show that large banks have been&nbsp;<a href="https://www.fsforum.com/types/press/unprecedented-increase-in-large-bank-lending-to-help-businesses-through-the-recovery/">playing an outsized role</a>&nbsp;in supporting the U.S. economy. Indeed,&nbsp;<a href="https://www.nber.org/papers/w27256">research</a>&nbsp;from Boston College and Federal Reserve staff further documents that the bulk of corporate lending during the pandemic has come from large banks, showing these institutions have risen to the occasion during such trying times.</blockquote>The Federal Reserve and other regulators are wisely and judiciously making temporary adjustments to certain capital rules to ensure that formulaic and risk-blind capital requirements do not unnecessarily cinch the flow of credit, which is so crucial to managing through this crisis. The Fed’s modification of the SLR in these exigent times is a shining example of what a good regulator should do in a crisis.It is not a “rollback” or “weakening” of anything. Rather, it illustrates the central bank’s resolve in putting the economy and people ahead of inflexible rules.As the economic and public health data clearly show, the nation is not out of this pandemic yet. Regulators should continue to prudently modify regulations that risk unnecessarily crimping private credit expansion, which would present even more challenges to an already unstable economic recovery.&nbsp;<a href="https://www.americanbanker.com/author/sean-campbell">Sean Campbell</a>Sean Campbell is chief economist and head of policy research at the Financial Services Forum.

BankThink Op-ed: Forum Head of Research Explains Why Targeted Capital Relief Makes Sense for Large Banks & an Economy in Crisis

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<ul><li>We hold more than $4.2 trillion in loans, accounting for 40% of total lending to businesses and households.</li><li>We provide more than $679 billion, or nearly half, of all consumer loans by banks in the U.S., supporting everything from the purchase of a new car to furnishing a new home.</li><li>Lending by our institutions accounts for 34% of total commercial and industrial (C&amp;I) lending by banks, helping businesses grow and contribute to the economy.</li><li>We represent a major source of lending to small businesses in communities across the country, holding $126 billion in small business loans&nbsp;and allowing the economy to grow at both a local and national level.</li><li>We also collectively meet nearly three-quarters of the bank funding needs of other financial institutions, supporting community banks, insurance companies and mortgage finance companies, for example, which then provide important services to businesses and households.</li></ul>

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Lending

Our institutions lend to consumers, businesses and other financial institutions, promoting savings and investment that positions individuals and entities at all layers of the U.S. economy for resiliency and success. At the same time, we are supporting consumers, governments, and businesses of all sizes in growing and creating American jobs.

<ul><li>We underwrite nearly three-quarters of debt and equity transactions – such as initial public offerings – among large institutions in the U.S., providing a critical service that other U.S. institutions cannot offer on a similar scale.</li><li>With $4.2 trillion of mutual funds and annuities under management, we support the retirement and other savings needs of many Americans.</li><li>We finance a significant portion of state and local government expenditures for vital projects, like hospitals, roads, bridges, and schools, through $120 billion in municipal securities holdings. Additionally, we support a large portion of federal government expenditures through $1.1 trillion in U.S. Treasury securities holdings.</li></ul>

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Liquid Capital Markets

Our institutions help foster deep and liquid capital markets, ensuring the U.S. government and private institutions are able to effectively finance public spending and investments in the real economy. 

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Our Employees

Our institutions collectively employ more than 750,000 people, offering a variety of benefits and opportunities to help our employees achieve their personal and professional goals.

Forum members increased credit to businesses and households by 10%
to nearly $8.3 trillion in 2020.


Essential to the U.S. Economy

This op-ed was featured in <a href="https://www.americanbanker.com/opinion/easing-derivatives-trading-rule-would-help-the-system-not-hurt-it?utm_source=twitter&amp;utm_content=socialflow&amp;utm_campaign=bankthink-tw&amp;utm_medium=social">American Banker's BankThink</a>.&nbsp;<h3>By Kevin Fromer and Kenneth E. Bentsen</h3>&nbsp;<blockquote>Recent attempts by policymakers to eliminate an initial margin requirement for certain trading swaps between affiliates of the same financial institution would reduce costs for consumers and businesses.Such an action would also remove a competitive disadvantage for U.S. banks while promoting safety and soundness in the financial system. This is counter to a&nbsp;<a href="https://www.americanbanker.com/opinion/the-40-billion-gift-that-wall-street-doesnt-deserve">recent BankThink</a>&nbsp;in the July 16 issue of American Banker that made a number of incorrect assertions around both the need for continuing the margins requirement, and the rationale for ending it.</blockquote>However, it is important to first address the hyperbolic characterization of swaps, or derivatives. Swaps are an important and heavily regulated tool that banks and other institutions use to help manage their exposure, and that of American businesses and consumers, to risk and market fluctuations.The requirement that banks post an initial margin based on swaps between their own affiliates is one that should be revisited and ultimately removed. And there is good reason why.First, it yields no benefit. There are two regulatory margin requirements: initial margin and variation margin.Initial margin is exchanged at the time a swap transaction is established — and adjusted during the life of the transaction as needed — to minimize losses if a counterparty defaults on its obligations.This is sound policy for third-party contracts. But in the case of two affiliates or legal entities under the same corporate holding company, the exchange of interaffiliate initial margin serves no purpose in ensuring contract performance.Variation margin, however, does properly mitigate risk between affiliates. That’s because variation margin requires the exchange of collateral between affiliates based on the current value of the swaps, and accounts for changes in market value. The amount being collected through variation margin is also quite sizable.In 2018, the top 20 firms collected&nbsp;<a href="https://www.isda.org/2019/04/09/top-20-firms-collected-nearly-160-billion-in-initial-margin-at-year-end-2018-survey-finds/">more than $850 billion</a>&nbsp;in variation margin, or more than 20 times the amount of initial margin for interaffiliate swaps.&nbsp;In addition, banks also post initial margin on all trades with covered true third parties, amounting to approximately $158 billion.The technical fix policymakers are considering would only apply to the initial margin between affiliates. It would not change the variation margin requirement between affiliates, nor the initial and variation margin requirements for external counterparties.Second, if the initial margin requirement for interaffiliate swaps is maintained, the cost will ultimately be borne by customers and hurt American competitiveness.Indeed, swaps are an important tool utilized by pension funds for teachers, firefighters, manufacturers and many other kinds of businesses — big and small — to help manage risk. The collection of initial margin on transactions between affiliates increases costs for swaps for these end-users and subsequent customers.Given that U.S. bank regulators are the only major G-20 authorities to impose these requirements, the nation’s banks are left on an uneven playing field when competing both against foreign banks and other U.S. nonbanks. European and Japanese regulators, as well as the Commodity Futures Trading Commission and Securities and Exchange Commission, do not require initial margin collection between affiliates.Further, the assertion of lax regulation outside the U.S. is a red herring. It does not support the fact that all major jurisdictions have implemented substantial and similar rules regarding swaps and margin requirements, as per the G-20 Pittsburgh accords then led by the Obama administration.The current initial margin requirement also puts the safety and soundness of banks at risk. Initial margin requirements on interaffiliate swaps perversely act as a disincentive to better, centralized risk management of an institution.The associated costs discourage interaffiliate swaps in favor of hedging with third parties. Removing the requirement would help broaden a bank’s view of its overall risk exposure, and enhance the safety and soundness of the financial system.Finally, the recent BankThink piece oddly mentioned a proposal to revise the enhanced supplementary leverage ratio — a wholly unrelated issue — and repeated an inaccurate assertion that the change would lead to a large decrease in the amount of required capital at banks.Margin is not the same as capital. And importantly, the Federal Reserve’s own analysis showed that the proposal would not result in a material change in capital at the eight U.S.-based global systemically important banks.The eight global systemically important banks have&nbsp;<a href="https://www.fsforum.com/research/">increased their capital</a>&nbsp;to roughly $925 billion, or more than 40% during the past 10 years.Regulators worldwide and institutions have taken other important steps to greatly enhance the safety and resiliency of the global financial system. CFTC leadership of both political parties have supported the revision.<blockquote>After a decade of rapid regulatory change, we agree with the domestic and foreign regulators who have said it is imperative to review the rules to ensure its effectiveness and efficiency.Elimination of the interaffiliate initial margin requirement has bipartisan support because it would enhance the ability of banks to serve the economy without sacrificing regulatory improvements made in the past decade. Such a move is smart policy that would benefit consumers and businesses alike.</blockquote>Kevin Fromer Kevin Fromer is president and CEO of the Financial Services Forum, which represents the eight largest, most diversified U.S. banking institutions.Kenneth E. Bentsen Kenneth E. Bentsen, Jr., is president and CEO of the Securities Industry and Financial Markets Association.

BankThink Op-ed: Easing derivatives trading rule would help the system, not hurt it

Opinion

Letters

Joint Trades Letter Supporting the Fair Hiring in Banking Act

LIBOR Joint Trades Letter  - SBC Hearing

Proposed Interagency Guidance on Third-Party Relationships: Risk Management

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BNY Mellon

External Link

First-ever BNY Mellon Giving Tuesday Campaign Empowers Employees to Double Their Impact

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Bank of America

Bank of America’s Native American Support Tops $17 Million Since 2020

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<ul><li>Citi has provided $173 million in capital, administered over $886 million in financing, and committed more than $79 million in philanthropic funding to more than 80 CDFIs across the country since 2015. The bank has also made its ATM network available free of charge to clients of nearly 30 MDIs and CDFIs – providing their customers with convenience and nearly $1 million in savings.</li><li>Goldman Sachs&nbsp;provided $774.5 million to eight different CDFIs between 2016 and 2020.</li><li>JPMorgan Chase&nbsp;has made 64 loans totaling more than $870 million to CDFIs and invested more than $1.4 billion in 49 different CDFIs through the New Markets Tax Credit program since 2015. Additionally, from 2015 to 2019 the firm provided 1,001 grants to 145 CDFIs totaling $194 million and continues to mentor and advise select MDIs and CDFIs to help them achieve their future success.</li><li>Morgan Stanley&nbsp;has provided $3.6 billion in investment in 41 CDFIs and $30.5 million in investment in three MDIs between 2016 and 2020. Additionally, the firm has <a href="https://www.morganstanley.com/press-releases/morgan-stanley-announces--10-million-to-support-minority-deposit">committed</a> $10 million in grants supporting MDIs.</li><li>Wells Fargo&nbsp;has invested $847 million in 305 unique CDFIs through grant and debt capital since 2015. Additionally, the bank has <a href="https://stories.wf.com/wells-fargo-announces-seeking-commit-50-million-capital-minority-depository-institutions/">committed</a> to investing up to $50 million in capital for MDIs.</li></ul>

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Supporting CDFIs and MDIs

We are supporting hundreds of Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) by providing over $8.5 billion in capital and financing between 2016 and 2020.

<ul><li>Bank of America&nbsp;in 2020&nbsp;<a href="https://newsroom.bankofamerica.com/press-releases/bank-america-announces-four-year-1-billion-commitment-supporting-economic">committed</a> $1 billion over four years to help local communities address economic and racial inequality. The firm has also <a href="https://newsroom.bankofamerica.com/press-releases/community-development/smithsonian-announces-race-community-and-our-shared-future#:~:text=Bank%20of%20America's%20%2425%20million,economic%20opportunity%20in%20minority%20communities.">committed</a> an additional $25 million to the Smithsonian to fund its Race, Community and Our Shared Future initiative, <a href="https://newsroom.bankofamerica.com/press-releases/corporate-philanthropy/bank-america-expands-support-boys-girls-clubs-america-1">provided</a> a $1 million grant to the Boys &amp; Girls Clubs of America, and made a $22.1 million <a href="https://newsroom.bankofamerica.com/press-releases/corporate-philanthropy/bank-america-expands-support-boys-girls-clubs-america-1">investment</a> in 2020 Neighborhood Builders and Neighborhood Champions in Support of Local Organizations.&nbsp; &nbsp;&nbsp;</li><li>BNY Mellon&nbsp;has <a href="https://www.bnymellon.com/us/en/about-us/newsroom/company-news/bny-mellon-commits-20-million-to-fund-the-future-workforce.html">committed</a> $20 million to community colleges and a select group of local and national organizations to support workforce training programs in traditionally underrepresented minority groups and communities. Additionally, the bank made an initial pledge of $1.5 million to organizations including My Brother’s Keeper, the NAACP Legal Defense and Education Fund, the Southern Poverty Law Center, the National Network for Safe Communities and the Vera Institute of Justice.</li><li>Citi <a href="https://www.citigroup.com/citi/news/2020/200923a.htm">launched</a> more than $1 billion in strategic initiatives in 2020 aimed at closing the racial wealth gap. The bank also <a href="https://www.citigroup.com/citi/news/2020/200117a.htm">launched</a> the $150 million Citi Impact Fund to make equity investments in ‘double bottom line’ private sector companies, with a focus on women and minority owned businesses.</li><li>Goldman Sachs&nbsp;has launched the One Million Black Women <a href="https://www.goldmansachs.com/our-commitments/sustainability/one-million-black-women/index.html">initiative</a>, a $10 billion investment initiative to advance racial equity and economic opportunity by investing in Black women with the goal of impacting the lives of at least 1 million Black women by 2030. It has also <a href="https://www.goldmansachs.com/media-relations/press-releases/current/gs-fund-for-racial-equity.html">created</a> the Goldman Sachs Fund for Racial Equity, which launched with $10 million – building on the more than $200 million the firm has granted over the past decade to organizations serving communities of color – and aims to support organizations addressing racial injustice, structural inequity and economic prosperity.</li><li>JPMorgan Chase&nbsp;in 2020 <a href="https://www.jpmorganchase.com/news-stories/jpmc-commits-30-billion-to-advance-racial-equity">committed</a> $30 billion to advance racial equity over the next five years through growing Black- and Latinx-owned businesses, improving financial health and access to banking in Black and Latinx communities and accelerating investment to build a more diverse and inclusive workforce.</li><li>Morgan Stanley&nbsp;<a href="https://www.morganstanley.com/press-releases/morgan-stanley-announces-10-million-to-support-national-urban-le">announced</a> $10 million in grants to support the National Urban League, aimed at supporting financial literacy, homeowner counseling and workforce development programs. The firm also <a href="https://www.morganstanley.com/press-releases/morgan-stanley-commits--5-million-to-naacp-legal-defense-and-edu">committed</a> $5 million on top of matching employee contributions to the NAACP Legal Defense and Education Fund to support its work in fighting for racial justice.</li><li>State Street&nbsp;in 2020 <a href="https://www.statestreet.com/content/dam/statestreet/documents/New_Commonwealth_Racial_Equity_and_Social_Justice_Fund_Press_Release.pdf">announced</a> a five year, $5 million commitment to the New Commonwealth Racial Equity and Social Justice Fund, which supports Black- and brown-led organizations that are working on economic empowerment, youth civic engagement, healthcare equity and criminal justice reform.</li></ul>

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Combatting Inequality

We are dedicated to combatting inequality through a series of important initiatives. These initiatives support minority owned small businesses and provide funding for community organizations that are dedicated to closing the racial wealth gap.

<ul><li>Bank of America in 2020 provided $5.9 billion to build sustainable communities, creating more than <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2021/02/bank-of-america-community-development-banking-provided-record--5.html">13,000 affordable housing units</a>, including 1,650 units developed by minority and women- owned businesses. This year, the bank tripled its affordable homeownership initiative to $15 billion through 2025, giving homebuyers as much as $10,000 for down payments and as much as $7,500 for closing costs. In May the bank and NACA <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2021/05/bank-of-america-and-naca-expand-mortgage-program-to--15-billion-.html">expanded their program</a> to provide $15 billion in mortgages to low-to-moderate income homebuyers through May 2027.</li><li>Citi in 2020 issued the first <a href="https://www.citigroup.com/citi/news/2020/201030a.htm">affordable housing bond</a> with a notional value of $2.5 billion. Proceeds will finance the construction, rehabilitation and preservation of quality affordable housing for low- and moderate- income populations in the U.S. Citi is also investing more than $200 million, out of a $550 million three- year commitment to affordable housing, in five equity funds co- managed by Black investment managers to preserve multi-family rental housing.</li><li>Goldman Sachs promotes affordable housing through its <a href="https://www.goldmansachs.com/what-we-do/asset-management/impact-investing/">Urban Investment Group</a>, a domestic, multi-asset class investing and lending business deploying over $1 billion annually in community and economic development through real estate and other projects. In Utah, the bank’s work has led to the development of 4,700 affordable housing units, while in Newark and neighboring East Orange, N.J., investments by Goldman Sachs have led to over 2,000 units of mixed- income housing.</li><li>JPMorgan Chase in 2020 announced a five-year <a href="https://www.jpmorgan.com/commercial-banking/insights/breaking-down-barriers-to-affordable-housing---jpmorgan-chase">commitment</a> to finance 100,000 affordable housing units in underserved communities, originate 40,000 home loans for Black and Latinx households, and help 20,000 Black and Latinx households lower their mortgage payments through refinancing. The bank also expanded its Homebuyer <a href="https://media.chase.com/news/chase-homebuyer-grant">grant program</a> to up to $5,500 to help cover closing costs and down payments in 6,700 minority neighborhoods nationwide.</li><li>Morgan Stanley <a href="https://www.morganstanley.com/press-releases/morgan-stanley-continues-commitment-to-sustainable-investing-wit">last year</a> issued its inaugural social bond for $1 billion to support affordable housing projects, the latest step in the bank’s work to advance market-based solutions to address sustainability challenges. Morgan Stanley intends to allocate an amount equal to the net proceeds of the social bond to affordable housing projects, which aim to provide housing at affordable rates to low- or moderate-income individuals and/or families in the United States.</li><li>State Street in 2020 invested over $240 million in <a href="https://www.statestreet.com/values/economic-responsibilities.html">affordable housing</a> communities throughout the U.S., through the Low-Income Housing Tax Credit (LIHTC) program. This investment resulted in the creation or preservation of approximately 9,500 affordable units in 25 states. Since 2010, State Street has invested over $1.7 billion in affordable housing, reaching nearly 100,000 households, including $85 million in the first few months of 2021.</li><li>Wells Fargo works with NeighborWorks® America <a href="https://www.wellsfargo.com/mortgage/lift/">to provide</a> down payment assistance and homebuyer education for low- and moderate- income families. Last year, the bank facilitated over $1.2 billion in bond offerings that provided critical funding to preserve and develop more than 10,400 homes intended for underserved communities. The bank also has made a $1 billion philanthropic commitment to address housing affordability solutions by 2025 and&nbsp; <a href="https://stories.wf.com/60-billion-plan-aims-to-boost-african-american-homeownership/">launched</a> a ten-year initiative with the National Urban League and the National Association of Real Estate Brokers to provide $60 billion in home loans to 250,000 African American homeowners and to invest $15 million in homeowner education and counseling.</li></ul>

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Commitment to Affordable Housing

Forum members are playing a leading role in promoting affordable housing throughout the country. In 2020 alone, Forum banks created or preserved more than 158,000 affordable housing units.

<ul><li>Recognizing the importance of a banking relationship to help narrow the wealth gap, Forum members were founding lenders in a pilot program with CFE to offer&nbsp;<a href="https://cfefund.org/project/bank-on/">BankOn accounts</a> to people across the country. More than <a href="https://2wvkof1mfraz2etgea1p8kiy-wpengine.netdna-ssl.com/wp-content/uploads/2021/07/CFE-Fund_-2021-Bank-On-100-Accts-Press-Release.pdf">100 lenders</a> big and small now offer BankOn accounts, <a href="https://www.stlouisfed.org/~/media/files/pdfs/community-development/bank-on/bankon_data.pdf?la=en">successfully</a> bringing people into the banking system.</li><li>Forum members have worked with CFE Fund and others to launch Financial Empowerment Centers in cities across the country. These centers offer free financial counseling, helping clients navigate complex financial situations and plan for the future. Additionally, the program supports strategic research projects to enhance the success of financial counseling.&nbsp;<a href="https://cfefund.org/project/financial-empowerment-centers/">Learn more</a>.</li><li>Bank of America, Citi, JPMorgan Chase, and Wells Fargo have long partnered with Cities for Financial Empowerment (CFE) to provide low-cost, low-fee checking accounts to help bring more people into the banking system.</li><li>The Citi Foundation <a href="https://www.prnewswire.com/news-releases/the-citi-foundation-and-cities-for-financial-empowerment-fund-to-increase-summer-job-opportunities-financial-education-and-banking-access-to-an-additional-140-000-young-people-301316128.html">announced</a> an additional $3.66 million in support to the CFE&nbsp;to increase summer job opportunities, financial education, and banking access to an additional 140,000 young people.</li><li>Forum members are working with the OCC on&nbsp;<a href="https://www.occ.treas.gov/topics/consumers-and-communities/minority-outreach/project-reach-fact-sheet.pdf">Project REACh</a>, a program to promote financial inclusion.&nbsp;Led by JPMorgan Chase, banks have worked to find ways to help people without traditional credit histories access credit. The banks have created a tool to import non-traditional data sources, such as deposit account activity, to allow lenders to have greater options to assess creditworthiness.</li><li>The Wells Fargo Foundation <a href="applewebdata://9AC3D0AC-44A3-42B2-AAA0-A73664A505E0/%E2%80%A2%09https:/cfefund.org/cfe-fund-and-wells-fargo-announce-third-cohort-of-bank-on-fellowship/">announced</a> a $1 million grant to CFE to increase the size of the BankOn Fellowship Program, which funds a full-time BankOn coalition leader focused on improving banking access for residents.</li></ul>

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Bringing Those Outside of Banking In

Forum members have long been on the frontlines in the effort to bring unbanked and underbanked Americans into the financial mainstream.

<ul><li>Bank of America&nbsp;has committed to spending nearly $2 billion annually with diverse businesses through its <a href="https://about.bankofamerica.com/en-us/what-guides-us/vendor-management.html#fbid=tlM4qFkwCad">Supplier Diversity program</a>.</li><li>BNY Mellon&nbsp;has established a dedicated <a href="https://www.bnymellon.com/us/en/supply-chain-responsibility-program/supply-chain-responsibility-program-statement.html">Supply Chain Responsibility program</a> to build and maintain a diverse supplier base, as well as host workshops and expos to support diverse vendor development.</li><li>Citi actively seeks diverse suppliers through minority and women business development organizations and participation in various trade show activities while utilizing diverse suppliers and consultants through their <a href="https://www.citigroup.com/citi/suppliers/who.htm">Supplier Diversity program</a>.</li><li>Goldman Sachs&nbsp;has <a href="https://www.goldmansachs.com/our-commitments/sustainability/our-vendor-program/vendor-diversity/">committed</a> to increasing spending with diverse vendors by 50 percent by 2025.</li><li>JPMorgan Chase&nbsp;has set a goal of continually exceeding $1 billion in spending with <a href="https://www.jpmorganchase.com/about/suppliers/supplier-diversity">diverse suppliers</a> each year.</li><li>Morgan Stanley&nbsp;<a href="https://www.morganstanley.com/about-us/supplier-diversity">partners</a> with supplier diversity organizations like the Women’s Business Enterprise National Council and the National Minority Supplier Development Council.</li><li>State Street&nbsp;has committed to increasing its spending with diverse suppliers over the next three years in order to strengthen Black- and Latinx-owned businesses.</li><li>Wells Fargo&nbsp;aims to spend 15 percent of its procurement budget with diverse suppliers through the bank’s <a href="https://www.wellsfargo.com/about/diversity/supplier-diversity/commitment/">Supplier Diversity program</a>.</li></ul>

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Supporting Diverse Suppliers

Our institutions are committing to partner with diverse vendors and suppliers to support minority and women-owned businesses.

We invested nearly $9 billion in Community Development Financial Institutions between 2016 and 2020.

Supporting Historically Underserved Communities

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Video

COVID Response

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Supporting Communities During the Pandemic

The COVID-19 pandemic is an unprecedented challenge for the world and the global economy and the largest U.S. banks are committed to supporting customers, clients, and the nation.

PPP loans from JPMorgan have supported 3 million workers at small businesses, including those working at Community Wellness Ventures, a mental health services company that serves children and families in Washington, D.C. The PPP loan has helped Dr. Charlayne Hayling-Williams and her husband, Dr. Rod Williams, continue to pay their counselors, social workers, psychologists and housing specialists so that they can continue to serve their community.The majority of Citibank’s PPP loans went to small businesses in the service sector. A PPP loan from Citi helped the Maryland Youth Ballet in Silver Spring retain teaching staff and find a way to teach students safely and retain employees. The students range in age from 2 to 19 years old. “If we hadn’t been able to receive this PPP loan, we wouldn’t be able to keep dancing,” Principal Deidre Byrne says. <a href="https://www.youtube.com/watch?v=dMzepw_oAtQ&amp;feature=youtu.be">Learn more</a>.State Street is a lead sponsor of <a href="https://www.smallbstrong.com/">Small Business Strong</a>, a non-profit organization helping women and minority owned small businesses navigate the devastating impact of the COVID-19 pandemic. Small Business Strong provides expedited, pro-bono resources to small businesses ranging from access to capital to consulting, business restructuring, business growth, digital marketing and customer engagement plans.Another way Forum banks have worked to assist small businesses is by supporting financial institutions with particularly strong connections to certain local communities. Forum banks have increased their support for Community Development Financial Institutions (CDFIs) during the pandemic. CDFIs are private financial institutions that are dedicated to providing responsible, affordable lending to help low-income and typically underserved communities. From 2015 to 2020, <a href="https://www.fsforum.com/wp-content/uploads/2021/01/cdfifactsheetfinal2021.jpg">Forum banks have invested nearly $9 billion in CDFIs.</a> Through such assistance, Forum member banks are working to ensure that small businesses in these communities get the help they need.Goldman Sachs last year committed $1 billion to support lending through CDFIs and other mission-driven lenders. More than 15,000 small businesses with 87,000 employees were supported just partway through the commitments. Nearly half of the initial funds went to businesses in minority communities; one-third went to those in low-income communities. <a href="https://www.forbes.com/sites/maneetahuja/2020/12/15/goldman-sachs-ceo-david-solomon-announces-additional-250-million-investment-in-small-businesses-bringing-total-2020-commitment-to-1-billion/?sh=3739ddc91000">Read more</a>.

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Supporting Small Businesses

Members of the Financial Services Forum have supported small businesses across the country throughout the pandemic, helping provide important resources during a challenging time for many business owners and their employees.

Throughout the pandemic, Forum members facilitated $94 billion in loans to nearly 1.25 million small businesses through the government Paycheck Protection Program. More than a quarter of these loans were made in low- and moderate-income communities and 91 percent of the PPP loans made by Forum members went to businesses with 20 or fewer employees.

At the beginning of 2020, Morgan Stanley launched the <a href="https://www.morganstanley.com/articles/alliance-for-childrens-mental-health-covid-19">Morgan Stanley Alliance for Children’s Mental Health</a> to help address children’s mental health, specifically the far-reaching challenges of stress, anxiety and depression. After the COVID-19 pandemic began, Morgan Stanley made an additional grant to the Child Mind Institute to provide digital mental health resources for children, adolescents and young adults, with a focus on vulnerable communities that traditionally lack access to these resources.Among other areas of focus, the Alliance is promoting public awareness of how the COVID-19 pandemic affects children’s mental health—both now and in the long term.In addition to providing relief to millions of customers, Wells Fargo has redirected millions of dollars from its philanthropic budget to COVID‑19 community relief efforts for the most impacted Americans. The company has worked to streamline grant making and offer highly flexible funding to nearly 1,000 nonprofits reaching more than 800 communities across the country.The program is making a difference in helping those who need it most access small business resources, stay in their homes and obtain financial health resources. In Alabama, a $100,000 grant to the Birmingham Strong Fund is providing emergency loans to small businesses to help stabilize employment, stimulate economic vitality, and offset losses related to COVID‑19. A $100,000 grant to United Way of Greater Los Angeles has helped the group create the Pandemic Relief Fund to support vulnerable populations who are at the greatest risk of health and economic impacts in this crisis. A $160,000 grant to the Institute of Community Alliances is providing rental assistance to shelter residents across the state of Iowa.Bank of America in 2020 announced a $1 billion, four-year commitment of additional support to help local communities address economic and racial inequality accelerated by the global pandemic. The programs are focused on assisting people and communities of color that have experienced a greater impact from the health crisis in areas that include:<ul><li>Virus testing, telemedicine, flu vaccination clinics, and other health services, with a special focus on communities of color.</li><li>Partnerships with historically black colleges and universities and Hispanic-serving institutions in the United States for hiring, research programs, and other areas of mutual opportunity.</li><li>Support to minority-owned small businesses, including clients and vendors.</li><li>Career reskilling/upskilling through partnerships with high schools and community colleges.</li><li>Operating support and investment for affordable housing/neighborhood revitalization, leveraging the company’s nearly $5 billion in Community Development Banking.</li><li>Further recruitment and retention of teammates in low- to moderate-income and disadvantaged communities to build on work the company has already done to serve clients locally.</li></ul>

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Supporting Communities

Forum members have collectively committed billions of dollars to communities in need. This aid is helping organizations and governments increase medical response capacity, address food insecurity, increase access to education in the face of school closures, protect impacted small businesses and provide support to the vulnerable populations.

Financial support is being dispersed to a number of organizations and programs such as the World Health Organization’s COVID-19 Solidarity Fund, the CDC Foundation, No Kid Hungry, Feeding America, National Centers for Disease Control and Prevention’s Emergency Relief Fund, the International Medical Corps and many other community-specific groups.

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Supporting Individuals

Forum members have been supporting their customers in a variety of ways, including by providing fee waivers, payment deferrals, and other assistance to help customers in need, with no negative credit bureau reporting for up-to-date clients.

Another key way in which large banks are serving households is the provision of safe, secure deposit accounts. 

People use deposit accounts as a safe store of value during uncertain times. With general economic uncertainty and an increase in market volatility, people are relying more on safe, liquid, bank deposits as they manage a variety of near-term risks. 

As people demand a safe store of value for their hard-earned money, Forum members have provided this critical service. Forum members provide depositors with a range of online services to access their deposits remotely, which are all the more valuable as people practice social distancing. 

Since the start of the crisis, <a href="https://www.bnymellon.com/us/en/insights/content-series/covid-19.html">Bank of New York Mellon</a> has worked to support its employees and their families with a number of actions and programs. The bank has provided paid leave benefits and an Employee Assistance Program for all employees and their direct family members, including a 24/7 COVID-19 support line. It is providing enhanced U.S. healthcare coverage so that COVID-19 testing and related outpatient services are provided without any employee out-of-pocket expense. The firm has also provided a 2-for-1 match for employee donations.

Father and child at a medical appointment 

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Supporting Our Employees

Forum members are actively helping ensure the health and well-being of their more than 750,000 employees. 

From special compensation awards, to additional time off, to counseling services, the nation’s largest banks have been taking significant steps to support their workforces.

In 2020, Forum member institutions:<ul><li>Increased credit to businesses and households by $785 billion to nearly $8.3 trillion.</li><li>Helped raise $2.2 trillion in corporate bonds and $339 billion in equity through the third quarter for U.S. companies, allowing them to continue to pay their workers, operate their businesses and meet their funding needs. This capital raising by large banks fulfills a critical need in the economy to connect savers, such as pension funds and endowments, with companies like Pfizer and 3M that need to borrow capital for everyday business needs. <a href="https://www.fsforum.com/types/press/blog/building-bridges-between-savers-and-borrowers-during-the-pandemic-large-bank-underwriting/">Read more</a>.</li><li>Remained strong and resilient, despite the significant headwinds. The members of the Financial Services Forum in 2020 increased capital and strengthened their liquidity positions while at the same time supporting business and consumers.</li></ul>

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Supporting the Economy

Forum member institutions have been a key source of support for the economy during the pandemic. They have supported the economy in a number of important ways.



Throughout the pandemic, we facilitated $94 billion in PPP loans to nearly 1.25 million small businesses across the country.

COVID-19 Response

The Charlotte Observer

Wells Fargo is Giving Charlotte Businesses $20 Million, No Strings Attached. Here’s Why 

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The Goldman Sachs Group, Inc.

David Solomon is Chairman and Chief Executive Officer and a member of the Board of Directors of The Goldman Sachs Group, Inc.

Previously, he was President and Chief Operating Officer and prior to that, he served as Co-Head of the Investment Banking Division from 2006 to 2016. Before that, Mr. Solomon was Global Head of the Financing Group, which includes all capital markets and derivative products for the firm’s corporate clients. He joined Goldman Sachs as a Partner in 1999.

Mr. Solomon is a member of the Board of Trustees of Hamilton College and serves on the board of The Robin Hood Foundation.

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