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Sean Campbell

Chief Economist, Head of Policy Research

<h3>Introduction</h3>The size and depth of U.S. capital markets is the envy of the world and facilitates a significant amount of corporate investment that helps grow our economy.&nbsp; Companies raise funds from capital markets by issuing equity and debt securities to a variety of investors, including pension funds, mutual funds, and households.&nbsp; This critical activity is facilitated largely by large bank intermediaries that “make markets” in these securities.&nbsp; In the U.S., Financial Services Forum members account for roughly three-fourths of this market-making activity.&nbsp; U.S. regulators recently <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230727a.htm">proposed</a> a significant increase in bank capital requirements, known as Basel III Finalization, that would substantially increase the cost of market making.&nbsp; The proposal would increase the cost of corporate investment and for investors to buy and sell these securities in the open market.&nbsp; In this post, we will discuss the role of capital in market making, recent trends in market-making activity, the potential impact of the proposed requirements on the provision of market-making services by banks as well as their likely impact on overall financial stability.&nbsp;<h3>Large Banks, Securities Underwriting, and Market Making</h3>A wide range of U.S. companies raise investment funds from the public by issuing debt and equity securities.&nbsp; These funds are then used for a variety of investment purposes such as new factories, research and development, or expansion into new markets.&nbsp; All of these activities support our economy.&nbsp; Companies typically raise investment funds by partnering with a large bank to execute the sale of the securities.&nbsp; A large bank will buy a fixed amount of securities from the company and then market the securities to investors such as pension funds, mutual funds, and households who want to purchase these securities for saving and investment purposes.Once the securities have been sold to investors, large bank intermediaries play a further, critical role.&nbsp; At some point, an initial investor, such as a pension fund, will need to sell the security it owns to raise cash.&nbsp; Similarly, another investor may have a need to purchase a security, perhaps because it has recently received cash that it needs to invest.&nbsp; Large bank intermediaries operate a constant market for these corporate securities to ensure that both buyers and sellers of securities have a ready market in which they can transact easily and at reasonable cost.&nbsp; Without banks acting as market makers, it would be very difficult and costly for buyers and sellers of corporate securities to adjust their holdings as their needs change.&nbsp; Accordingly, market-making activities by banks are critical to ensure well-functioning capital markets.In order to maintain a ready market, large bank market makers maintain an inventory of corporate securities.&nbsp; This inventory is actively used to make markets and ensure that market participants can readily transact at reasonable cost.&nbsp; To analogize, this is akin to the inventory at a car dealership.&nbsp; A car dealer without any inventory will be hard-pressed to facilitate any car sales or purchases!&nbsp; Similarly, bank market makers need to maintain sufficient securities inventory to facilitate security purchases and sales.&nbsp; A market in which buyers and sellers can transact easily and at reasonable cost is known as a “liquid” market and market makers effectively provide liquidity to the public by maintaining a sizeable inventory of securities.&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;<h3>Bank Capital and Market Making</h3>As we all know from watching the stock market, security prices go up and security prices go down.&nbsp; Accordingly, banks that actively hold sizeable securities inventories need appropriate capital to ensure that they can withstand market fluctuations.&nbsp; At the same time, equity capital is costly.&nbsp; As a result, while maintaining more capital improves a bank’s safety, it also raises the cost of providing market-making services to investors.&nbsp; Significant increases in required capital for market-making activity would increase costs and lead to smaller inventories and less liquid markets.&nbsp; Indeed, the past decade provides a clear case study of how increased capital requirements lead to less liquid capital markets.<h3>Market Risk Capital Requirements and Market Liquidity: Recent Evidence</h3>Following the 2008 financial crisis, bank regulators substantially raised the amount of capital that is required of banks to engage in market-making activities.&nbsp; These increased capital requirements came in two forms.<ul><li>First, global bank regulators increased market-making capital requirements through what is commonly referred to as “Basel 2.5.”&nbsp; According to <a href="https://www.bis.org/bcbs/publ/d352_note.pdf">regulators</a>, Basel 2.5 increased market-making capital requirements by 40 percent.</li><li>Second, in the U.S., bank regulators introduced a new stress testing capital regime that applied an extremely conservative “market shock” to market-making inventories that further increased required capital for market-making activities.</li></ul>So, what has been the impact of these significant increases in capital requirements?&nbsp; The chart below addresses this question in two ways.&nbsp; First, the chart shows the proportion of all large bank assets devoted to market making assets such as stocks, bonds, commodities, and derivatives.&nbsp; Second, the chart also shows data for a narrower class of securities - corporate bonds held by market makers.&nbsp;The fraction of market-making assets held by banks (blue line) has declined from roughly 20 percent to about 15 percent since 2010.&nbsp; The second line in the chart shows the experience for the more narrow class of corporate bonds (orange line).&nbsp; As shown in the chart, market makers have substantially reduced their inventory of corporate bonds over the same period.&nbsp; As regulators markedly increased required capital, large banks have reduced their inventories to conserve capital.<figure class="image"><img src="https://fsforum.com/a/media/picture1.png"></figure>Source: Financial Accounts of the United States, Quarterly Trends for Consolidated U.S. Banking OrganizationsGiven the demonstrable decline in inventories, is there any evidence that capital markets have suffered as a result?&nbsp; Yes.&nbsp; A broad range of market <a href="https://www.ft.com/content/cbc47bbf-f158-4330-9e29-5b0b71935140">commentary</a> has noted a steady decline in the liquidity of capital markets over the past decade.&nbsp; In addition, reports from the official sector such as the International Monetary Fund (<a href="https://www.imf.org/External/Pubs/FT/GFSR/2015/02/pdf/c2_v2.pdf">IMF</a>) and the Committee on the Global Financial System (<a href="https://www.bis.org/publ/cgfs55.pdf">CGFS</a>) have discussed the issue of declining liquidity over the past decade, including the contribution arising from reduced inventories of market makers.&nbsp; The clear link between rising market-making capital requirements, declining inventories, and reduced market liquidity raises serious questions about a further, unnecessary increase in market-making capital requirements.<h3>Proposed Bank Capital Increase is Unnecessary and Would Further Worsen Market Liquidity</h3>The new requirements that are being proposed by U.S. regulators would significantly increase capital requirements for market-making activities.&nbsp; According to the proposal’s own <a href="https://www.federalreserve.gov/aboutthefed/boardmeetings/frn-basel-iii-20230727.pdf">analysis</a>, the amount of large bank capital required to make markets would increase by more than 75 percent.In light of such a significant increase in capital, it is important to ask what specific events or facts suggest such an increase is necessary?&nbsp; Previously we discussed Basel 2.5 and the advent of stress testing.&nbsp; Both developments followed the financial crisis.&nbsp; And while one may argue about the causes of the financial crisis or the role played by financial market activities, there was a clear economic event that precipitated these changes.There is no analogous event or fact pattern in the present situation.&nbsp; U.S. regulators are proposing a substantial increase in the required capital for market making yet there have not been any events to suggest that these activities are undercapitalized.&nbsp; Rather, the contrary is true.&nbsp; During the real-world stress test of the COVID pandemic, financial markets came under significant stress, but large banks performed extremely well while also engaging in record-breaking amounts of securities <a href="https://fsforum.com/news/forum-members-help-companies-access-market-finance-during-the-pandemic">underwriting</a> to support a wide range of companies that needed financing to deal with the challenges presented by the pandemic.An increase in required capital of this magnitude would only exacerbate recent trends that have challenged market liquidity.&nbsp; Ultimately, increased requirements would increase costs for companies seeking to make investments to grow the economy as well as savers looking for a liquid store of value for their hard-earned investment capital.&nbsp; At the same time, given the already significant increases in capital over the past decade, further increasing capital would have relatively small effects on the safety of market-making activities.<h3>Increased Market-Making Capital Requirements Would Drive Activity Outside the Banking System</h3>Finally, it is critical to consider the effect that raising capital would have on the overall composition of our financial system.&nbsp; Over the past decade or so, much capital market activity has migrated out of the highly regulated banking system and into less well-regulated non-banks.&nbsp; As a specific example, today roughly <a href="https://www.ecb.europa.eu/pub/economic-research/resbull/2020/html/ecb.rb201215~210477c6b0.en.html">50</a> percent of U.S. equity trading is handled by high-frequency trading (HFT) firms, which are outside the banking system.&nbsp; As bank capital requirements for market-making services increase, banks become less competitive in offering these services and non-banks may fill the void.&nbsp; A trend toward non-banks raises serious questions about financial stability as these non-banks typically are not subject to bank-style capital (or liquidity) requirements and may pose broader risks to financial stability – especially in times of market stress when market-making services are in such high demand.&nbsp; In this vein, <a href="https://www.fsb.org/2021/10/lessons-learnt-from-the-covid-19-pandemic-from-a-financial-stability-perspective-final-report/">analyses</a> of events surrounding the COVID pandemic have suggested that non-banks were more fragile and less resilient than highly regulated banks.&nbsp; As a result, the current proposal to increase market-making capital requirements is even more concerning because it may further alter the balance of banks and non-banks in the provision of capital market services.&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;<h3>Conclusion</h3>U.S. capital markets are the envy of the world.&nbsp; Everyday companies use these markets to raise funding for needed investments that grow our economy.&nbsp; At the same time, savers use these markets to find a liquid and valuable store of value for their hard-earned savings.&nbsp; Over the past decade or so, bank capital requirements have increased tremendously, and market liquidity has broadly declined, which has raised costs for companies seeking investment capital and savers looking for a solid financial return on their capital.&nbsp; The Basel III Finalization proposal would dramatically increase required capital for market-making activities by an additional 75 percent for large banks.&nbsp; The proposed increase is not tied to any observable increase in financial risks or specific events that would, in any way, suggest that market-making capital is too low.&nbsp; Rather, available evidence clearly demonstrates that large bank market makers have been resilient during times of stress while their non-bank counterparts have been demonstrably less resilient.&nbsp; Imposing unnecessary costs on companies, savers, and investors would harm our capital markets and the economy.&nbsp; U.S. regulators should revisit their proposal and avoid these impacts before finalizing, otherwise we will see further strain on market liquidity and increased potential for financial instability.

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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

Capital Insights: Proposed Market-Making Requirement a Threat to Liquidity, Economy, and Financial Stability 

<h3>Introduction</h3>Recently, the Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (US agencies) issued a <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230727a.htm">proposal</a> to increase capital requirements for all banks with total assets greater than $100 billion.&nbsp; This proposal is directly based on a revised capital <a href="https://www.bis.org/bcbs/publ/d424.htm">framework</a> that was agreed to by a group of global bank regulators, known as the Basel Committee on Banking Supervision (BCBS), in 2017.&nbsp; Importantly, the U.S. agencies are all active members of the BCBS and each played an important role in crafting the 2017 framework.It has been estimated that the proposal will increase large bank capital requirements by 20 percent or more.&nbsp; In this Capital Insights post, we will focus on one specific aspect of the heightened requirements – the negative impact these new capital rules would have on small business lending.&nbsp; Further, we will discuss how the U.S. capital proposal is out of step with proposals made by European Union (EU) and United Kingdom (UK) bank regulators to implement the 2017 Basel framework.<h3>Risk Weights for Investment Grade Corporate Loans &nbsp;&nbsp;</h3>Today, all corporate loans receive a “risk weight” of 100 percent.&nbsp; This means that if a bank has a capital requirement of, say, 10 percent, that bank would need to use $10 of equity capital to make a $100 loan.&nbsp; The other $90 would be sourced from a bank’s deposits.&nbsp; A risk weight of 50 percent would mean that the same bank could make the same $100 loan using only $5 in equity capital (and $95 in deposits).&nbsp; The risk weight assigned to corporate loans is important because as banks are required to use more equity capital, the cost of lending rises because equity capital is the most expensive form of finance.&nbsp; Loans requiring more equity capital are more expensive and less available than loans requiring less equity capital.&nbsp;&nbsp;The Basel framework and the recent U.S. proposal both make a change to the risk weight for corporate loans.&nbsp; Specifically, corporations and businesses that have a demonstrated ability to repay their loans can be classified as “Investment Grade” and receive a reduced risk weight of 65 percent rather than 100 percent.&nbsp; In the context of our earlier example, this would mean that a bank could make a $100 loan using $6.50 in equity capital rather than $10.00.&nbsp; In the chart below, we show the difference in required capital for an Investment Grade corporate loan both before and after the proposed change to the capital regime.<figure class="image"><img src="https://fsforum.com/a/media/picture4.png"></figure>In principle, this is a sensible and important change to the capital rules.&nbsp; All companies should not be painted with same brush.&nbsp; Financially responsible companies with a demonstrated ability to repay their debts are less risky and should require less equity capital.&nbsp; This clear link between “risk and return” is a bedrock principle of modern finance that should be reflected in bank capital requirements.&nbsp;<h3>Smart Policy is Poorly Executed in the Capital Proposal</h3>So far so good.&nbsp; Strong companies that are low risk can receive a lower risk weight of 65 percent and access bank financing on better terms, which makes a lot of sense.&nbsp; Where is the problem?The problem arises from a provision of both the Basel and U.S. proposals that severely limits the application of Investment Grade status to only the largest public companies.&nbsp; Specifically, the only companies that are eligible to be classified as investment grade are companies that have “publicly traded securities outstanding,” such as debt or equity securities (see page 89 of 1087 in the <a href="https://www.federalreserve.gov/aboutthefed/boardmeetings/frn-basel-iii-20230727.pdf">proposal</a>).This limitation is not motivated by any sensible risk considerations and is completely unnecessary for two reasons.&nbsp;First, there is no connection whatsoever between whether a company is high risk or low risk and whether it issues publicly traded securities.&nbsp; Publicly listed companies run the gamut from very conservative and low risk to the most speculative and risky of companies.&nbsp; A public listing is in no way a conclusive statement about underlying risk.&nbsp; And only the largest companies have the scale to issue public securities.&nbsp; At the same time, our economy is chock full of smaller companies that have borrowed and repaid many bank loans over an extended period.&nbsp; Why should these smaller companies with an established strong credit record be excluded from the Investment Grade designation? &nbsp;Second, smaller companies that do not have the scale to issue publicly traded securities are precisely the companies that rely most heavily on bank borrowing.&nbsp; And most companies in the United States are indeed small.&nbsp; According to the <a href="https://www.census.gov/data/tables/2020/econ/susb/2020-susb-annual.html">Census Bureau</a>, the U.S. economy has over 28 million companies and only about <a href="https://www.theglobaleconomy.com/USA/Listed_companies/">4,200</a> – or .015 percent – of these companies are publicly listed. &nbsp;&nbsp;As a result, denying smaller creditworthy companies access to better funding excludes the vast majority of U.S. companies and these firms don’t have as many alternative funding sources as do the very largest companies that are publicly listed.This unnecessary limitation will have the effect of creating a “two-tiered” credit system in which loans to creditworthy, public companies will require less capital than creditworthy small businesses as depicted in the chart below.&nbsp; As a result, bank lending to small businesses will be disadvantaged relative to lending to larger public corporations because smaller companies will be excluded from the investment grade classification.<figure class="image"><img src="https://fsforum.com/a/media/picture5.png"></figure><h3>Fixing The Mistake: Look Across the Pond</h3>Both the UK and the EU are also in the process of implementing the 2017 Basel reform.&nbsp; Both the UK and EU proposals are cognizant of the potential for this type of limitation to severely harm small businesses and have taken steps to ensure that small businesses are not denied Investment Grade status simply because of their smaller size.&nbsp; U.S. regulators should closely consider the proposals made by the EU and UK and find a way to ensure that creditworthy, small businesses in the U.S. have access to needed bank funding at reasonable cost.&nbsp;&nbsp; In addition to the disadvantage relative to U.S. public companies, small and mid-market companies in the U.S. will be disadvantaged relative to UK and EU companies, which means they could lose out on valuable business overseas.&nbsp; Our capital rules should not unnecessarily make it harder for U.S. companies to sell and grow through trade.&nbsp;&nbsp;<h3>Conclusion</h3>Small businesses are important to the vitality and dynamism of the U.S. economy.&nbsp; One key aspect of newly proposed bank capital rules would unnecessarily and unfairly increase the cost and decrease the availability of lending to small businesses.&nbsp; This result is not based on any sensible measure of risk and is not appropriate.&nbsp; European and UK regulators have recognized that this outcome is not sensible and have adjusted their implementation of the Basel capital framework to ensure creditworthy, smaller companies are not cut off from accessing bank financing at reasonable cost.&nbsp; The U.S. agencies should adjust their proposal to ensure that new bank capital rules do not unfairly and inappropriately disadvantage small businesses from accessing bank credit.&nbsp;&nbsp;&nbsp;

Capital Insights: New Bank Capital Rules Will Handicap Small Businesses 

Recently, the Federal Reserve, FDIC, and the Office of the Comptroller of the Currency issued a <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230727a.htm">proposal</a> to substantially increase capital requirements for large U.S. banks.&nbsp; While there are many aspects of the proposal that are notable and will receive considerable attention over the coming months, one exceptionally notable aspect is the significant lack of consensus among voting principals at the regulatory agencies.&nbsp; At both the Federal Reserve and the FDIC there were two dissenting votes on the proposal.&nbsp; Further, while Federal Reserve Board Chair Jerome Powell voted for the proposal, his <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230727a.htm">statement</a> made clear that he has a number of open and unresolved questions about the necessity and costs of significantly higher capital requirements.&nbsp;The last time the banking sector saw such a significant increase in capital requirements was when <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20130702a.htm">Basel III</a> was implemented in response to the financial crisis.&nbsp; Unlike the recent proposal, however, Basel III had unanimous support from agency principals.&nbsp; A capital hike of this magnitude would have substantial economic costs.&nbsp; As we have discussed in prior posts, independent <a href="https://www.piie.com/publications/working-papers/testing-modigliani-miller-theorem-capital-structure-irrelevance-banks">research</a> suggests that a capital increase of this magnitude could cost the U.S. economy as much as $ 1 trillion over the next thirty years.As Chair Powell stated, “raising capital requirements also increases the cost of, and reduces access to, credit.”&nbsp;The recent capital proposal is exceedingly lengthy and complex, coming in at over 1,000 pages, and, if implemented as written, could increase capital requirements by 20 percent or more.&nbsp; But despite the serious potential harm, regulators have made clear that they have yet to rigorously study the impact of the proposal on the banking sector and the broader economy.&nbsp; Clearly, a capital proposal of this size, complexity, and significance must be subjected to a rigorous and transparent cost-benefit analysis.&nbsp; A failure to rigorously examine the impacts of this proposal would be unacceptable given the stakes for our economy.&nbsp;To improve transparency, promote discussion and more generally demystify this complex and significant proposal, we are launching a blog series - Capital Insights - to identify and shed light on some of the most problematic and costly aspects of this proposal.&nbsp; The series will extensively, though efficiently, analyze key aspects of the proposal.&nbsp; Each blog will be focused on a single aspect of the capital proposal, the related costs, and the overall impact on the economy.&nbsp; Our inaugural blog in this new series will focus on the impact of the capital proposal on small businesses.&nbsp; Small businesses are crucial to the vibrancy of our economy and, unfortunately, this capital proposal would result in significant and unnecessary costs for small businesses that would place a drag on the economy.&nbsp; We will also address other key issues in the series including the impact on the ability of large companies to make needed investments, the ability of businesses to manage risks, and the impact on the competitiveness of U.S. banks.The recently released capital proposal has the potential to dramatically and negatively impact our banking industry and the economy.&nbsp; We look forward to bringing the proposal, and its consequences, into full view so that policymakers and the public better understand what it could mean for American families, businesses and future competitiveness. &nbsp;&nbsp;&nbsp;&nbsp;

Capital Insights: Demystifying the Consequences of Higher Capital Requirements

BankNotes Blog

Dear reader,Welcome to the latest edition of The Forum File. In this edition, we are sharing our firms’ efforts to remove economic barriers in underserved communities.We hope you enjoy reading this edition and please do not hesitate to share your feedback.Kevin Fromer, President and CEO, Financial Services Forum&nbsp;<h2>Penny for Your Thoughts</h2>Heather Higginbottom is the Co-Head of Global Philanthropy and Head of Research and Policy at JPMorgan Chase&nbsp;<h3>Tell me about the goals and strategy for the JPMorgan Chase PolicyCenter?</h3>We established the <a href="https://www.jpmorganchase.com/impact/our-approach/policy-center">JPMorgan Chase PolicyCenter</a> in 2019 to advocate for nonpartisan, data-driven ideas to help us further our overarching goal of promoting inclusive economic growth around the world. To do this, the PolicyCenter creates innovative partnerships, identifies gaps in research, and fosters an actionable policy dialogue among key academic, nonprofit, and business partners. Many of the policies on which it focuses are related to the firm’s pillars, including Business Growth and Entrepreneurship, Careers and Skills, Neighborhood Development, and Financial Health. I’m really proud of how the PolicyCenter has evolved over the past four years to tackle pressing issues. For example, during the pandemic, the PolicyCenter supported comprehensive reforms to improve affordable rental housing and homeownership, including expediting the execution of better targeted rental assistance, incentivizing eviction reforms that improve outcomes for tenants and landlords, and building on COVID-19 protections that support homeowners.&nbsp;<h3>Why is a skilled workforce critical to U.S. economic competitiveness, and what is JPMorgan Chase doing to help close the skills gap?</h3>We know that a good job is foundational to unlocking economic mobility and can have a multiplying effect in our communities, but access to these opportunities is often out of reach for too many workers. To meet this challenge, in 2019, we launched a $350 million, 5-year global initiative to develop, test, and scale innovative efforts that prepare individuals with the skills they need to be successful in a rapidly changing economy. Looking ahead, the private sector has an important role to play in advancing “earn and learn apprenticeships,” which combine paid, on-the-job training and mentorship with formal classroom or online instruction to help individuals master the knowledge, skills, and competencies they need for career success. A prosperous and inclusive job market is the basis of a strong economy, which is why it is imperative for companies like ours to transform how we prepare people to compete for well-paying jobs and successful careers.&nbsp;<h3>How does JPMorgan Chase take its work to close the skills gap into historically underserved communities?</h3>&nbsp;We are committed to helping create economic mobility and career pathways by building durable partnerships between local school systems, colleges and universities, education and workforce development agencies, and employers. For example, through the <a href="https://www.jpmorganchase.com/impact/people/advancing-black-pathways">Advancing Black Pathways</a> and <a href="https://www.jpmorganchase.com/impact/people/advancing-hispanics-latinos">Advancing Hispanic &amp; Latinos</a> initiatives, we support economic success for Hispanic, Latino, and Black communities at a global scale. We have also committed $1 million in philanthropic capital to Hispanic-Serving Institutions (HSIs) and related professional associations and intermediaries. These commitments are put toward programs that enhance student support systems at HSIs as well as connect students and their families with the resources they need to complete higher education and access quality career pathways.&nbsp;<h2>Value Add</h2>JPMorgan Chase’s investment in Detroit<figure class="image"><img src="https://fsforum.com/a/media/detroit-forum-file.jpg"></figure>When the city of Detroit filed for bankruptcy in 2013, times were hard: half of the city’s street lights were out, a third of buses were sitting in garages, and only eight ambulances operated across the entire city. JPMorgan Chase had been doing business in Detroit since 1933 and seen this struggle firsthand through its employees, clients, and customers who lived it. But in this challenging moment, the company saw an opportunity to collaborate with the government, other businesses, and community leaders to revitalize the city.&nbsp;That collaboration laid the groundwork for what has culminated in a $200 million commitment in Detroit focused on skills training and job creation, increasing access to affordable housing, growing small businesses, and planting the seeds for financial security for more Detroiters. Beyond JPMorgan’s business and philanthropic capital, its employees apply their skills and expertise to help ensure that the city’s economic turnaround creates lasting opportunity for its residents.Through its support for the <a href="https://www.jpmorganchase.com/news-stories/how-39mm-loan-fund-is-helping-underserved-entrepreneurs-grow">Entrepreneurs of Color Fund</a>, JPMorgan Chase helped small business owner and local developer Marcus Jones revitalize his community in the McNichols neighborhood. There Jones and his partner launched the Detroit Training Center (DTC) to provide vocational training and certifications to local residents. As DTC grew, it worked to offer training and certifications to veterans and the homeless.&nbsp;As part of its ongoing investment in Detroit’s recovery and commitment to supporting local developers, JPMorgan Chase has also supported Capital Impact Partners to launch the Equitable Development Initiative (EDI), which mentors early- and mid-career underrepresented developers, such as Jones. In four years, over 200 local developers have been trained by the EDI.&nbsp;In 2022, Jones opened the Detroit Pizza Bar, and it became the first sit-down restaurant in the McNichols neighborhood in 40 years. The development for the pizza restaurant hired workers trained by Jones through his workforce development programs for renovations. And, when the restaurant was ready to open, Jones hired people who lived within a two-mile radius, prioritizing those who might not be able to afford a car. He also reached out to public and culinary schools to train his employees in all aspects of the business so his employees could leave with even better resumes.&nbsp;The Detroit Pizza Bar became more than just a place to grab a slice, but an example of how intentional community development is vital for economic growth and opportunity in a community like Detroit.&nbsp;<h2>Capital Gains</h2>What we’re doing in Washington<figure class="image"><img src="https://fsforum.com/a/media/img_0024.jpg"></figure>Forum President and CEO Kevin Fromer <a href="https://fsforum.com/news/what-kind-of-a-banking-system-do-you-want">joined</a> “Banking with Interest” host Rob Blackwell to discuss how increasing bank capital requirements would push activities outside the regulated banking sector and harm consumers, businesses, and the U.S. economy’s competitiveness. “You have to go back to the why -- why do you need to constrain banks and their customers?” Fromer said. “There are real world impacts of these decisions.” Listen to the full interview <a href="https://podcasts.apple.com/us/podcast/the-case-against-higher-bank-capital-requirements/id1506774121?i=1000627588419">here</a>.The Forum, with five other trade associations, wrote a <a href="https://fsforum.com/news/banking-trade-associations-call-on-banking-agencies-to-re-propose-basel-rule">letter</a> to the U.S. banking agencies calling for a re-proposal of the Basel capital rule, noting that “the proposed rule repeatedly relies on data and analyses that the agencies have not made available to the public. This reliance on non-public information violates clear requirements under the Administrative Procedure Act that agencies must publicly disclose the data and analyses on which their rulemaking is based.”The Forum <a href="https://fsforum.com/a/media/capital-and-u.s.-economy.pdf">highlighted</a> how higher capital requirements would negatively impact households, businesses, and the overall U.S. economy.The Forum also joined with 26 other trade organizations to send a <a href="https://fsforum.com/a/media/joint-trades-letter-on-sec-safeguarding-proposal---9.12.23---final.pdf">letter</a> to U.S. Securities and Exchange Commission Chair Gary Gensler regarding the agency’s Safeguarding Advisory Client Assets proposal, highlighting the negative impacts of the proposal on investors, market participants, and the financial markets.<h2>&nbsp;</h2><h2>Our Two Cents</h2>Research from the ForumThe Forum launched a new blog series, <a href="https://fsforum.com/news/capital-insights-demystifying-the-consequences-of-higher-capital-requirements">Capital Insights</a>, to improve transparency and promote discussion on the proposed capital requirements. Our Chief Economist and Head of Policy Research, Sean Campbell, highlighted how the role of capital requirements would impact:<ul><li><a href="https://fsforum.com/news/capital-insights-new-bank-capital-rules-will-handicap-small-businesses">small businesses</a> by making lending more costly and less available.</li><li>the <a href="https://fsforum.com/news/capital-insights-proposed-market-making-requirement-a-threat-to-liquidity-economy-and-financial-stability">cost of market </a>making and how it would further strain market liquidity.</li></ul>&nbsp;<h2>Checking the Balance</h2>Members in the NewsBank of America <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2023/07/bank-of-america-awards--1m-grant-to-national-juneteenth-museum.html">awarded</a> a $1 million grant for the development of the National Juneteenth Museum in Fort Worth, Texas. “The bank’s foundational support acknowledges the significant role Juneteenth plays in our city’s history and is another demonstration of our commitment to advance economic opportunity and racial equality,” said Mike Pavell, Bank of America Fort Worth President.BNY Mellon <a href="https://www.bnymellon.com/us/en/about-us/newsroom/company-news/bny-mellon-invests-10-million-dollars-with-lafayette-square-to-support-underserved-communities.html">announced</a> its investment of $10 million with Lafayette Square, an investment firm that seeks to create opportunities to support people and communities in low-to-moderate income areas while generating positive returns for investors. BNY Mellon’s contribution will fund Lafayette Square’s flagship investment strategy, which aims to deploy over 51 percent of invested capital in underserved areas or to borrowers who provide substantial employment to low- and moderate-income individuals.Citi <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fpressroom.ifc.org%2fall%2fpages%2fPressDetail.aspx%3fID%3d27739&amp;c=E,1,RfjnetTZ08-9Fqz_Rf98qc9If6Y8aLRcP6MR2anFZOTUt1jN3Rp8CaGtx1v-Efe8Y_wHCWw4nI3Rm9yvYrxKU-cHIXq71DnZoNgMZRF2KMM31_71mxw,&amp;typo=1">announced</a> a new agreement with the International Finance Corporation (IFC) to launch a $300 million facility pilot under IFC’s newly established Global Supply Chain Finance Program. The initiative will help boost supply chain finance in emerging markets by providing affordable financing options for buyers and suppliers and by creating new opportunities for small and medium enterprises across the globe.Goldman Sachs <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fwww.goldmansachs.com%2fcitizenship%2f10000-small-businesses%2fUS%2fnews-and-program-information%2fpages%2f10ksb-expansion-into-rural-communities.html&amp;c=E,1,aFwh66mi65ZgadkvaSnzE4NfO4s_RMWjJag9Rgvv4lW-XnpDViIEP4yxrJb7RAuRLSx1dejIVtDKf_OUx874Kyx-rKmppsmW2F2FLUxZ8QYFu7YXKPBr&amp;typo=1">announced</a> a $100 million investment in rural communities across the country, deepening its support for small businesses. The new initiative is an extension of Goldman Sachs’ <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fwww.goldmansachs.com%2fcitizenship%2f10000-small-businesses%2fUS%2findex.html&amp;c=E,1,Iailmfnwr55Ghxu3IHwuBHJVXQqsTRkMHUcGYQv7t1mCSmG2pBdJKvJITJxZoUNzw1Vam4JrdJEUJDDK4mh5gyXq4jCvN5wqyTvZk8dg3UQkEmjEzg,,&amp;typo=1">10,000 Small Businesses program</a>, which has served over 14,000 businesses across the U.S. for more than a decade by providing access to education and capital. The initiative will reach rural small business owners in 20 states in the next five years.JPMorgan Chase&nbsp;<a href="https://www.jpmorganchase.com/news-stories/jpmorgan-chase-announces-new-business-and-philanthropic-commitments">announced</a> more than $7.5 million in philanthropic commitments to three nonprofits to improve housing affordability and stability in Washington D.C. In addition, the firm is expanding its Chase Home Lending program, making $5,000 homebuyer grants available in more majority Black, Hispanic and Latino neighborhoods in D.C. The commitment is part of JPMorgan Chase's five-year commitment to improving housing for the underserved.Morgan Stanley’s Global Sports &amp; Entertainment Division <a href="https://www.morganstanley.com/press-releases/money-in-the-making--program-launch---morgan-stanley">announced</a> the launch of <a href="https://us.etrade.com/l/gse-money-in-the-making?vanity=gsemoneyinthemaking">Money in the Making</a>, a digital financial education program for the next generation of athletes, entertainers, sports and entertainment professionals and emerging talent. The program aims to provide these individuals with the financial education, tools and resources needed to build and manage wealth.State Street <a href="https://investors.statestreet.com/investor-news-events/press-releases/news-details/2023/State-Street-Partners-With-Diverse-Firms-to-Underwrite-1.5-Billion-of-Senior-Unsecured-Debt/default.aspx">partnered</a> with five diverse firms to underwrite $1.5 billion of senior unsecured debt. This marks State Street’s ninth consecutive debt offering and is consistent with State Street’s inclusion, diversity, and equity efforts.Wells Fargo <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fnewsroom.wf.com%2fEnglish%2fnews-releases%2fnews-release-details%2f2023%2fWells-Fargo-Launches-Down-Payment-Grant-Program-to-Help-Bridge-Homeownership-Gap%2fdefault.aspx&amp;c=E,1,MctesculdHaLoAxBtJ6rrhkSIr3NY-maL9SubiG7sePo-kG6yuzMW0kk9Y-uLft9PCp4RuM2tsUf6ZlD3ueoHhsBPOhjYBxwnB9uND0riGsh5kLRY6SCEcnubJZa&amp;typo=1">launched</a> the Homebuyer AccessSM grant to help bridge the homeownership gap in underserved communities. Wells Fargo Home Lending will offer $10,000 Homebuyer Access downpayment grants to eligible homebuyers in eight metropolitan areas. This offering under the bank’s Special Purpose Credit Program is part of Wells Fargo’s efforts to help drive economic growth, sustainable homeownership, and neighborhood stability in minority communities.

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The Forum File, 2023 Edition #6

Dear reader,Welcome to the latest edition of The Forum File. In this edition, we are highlighting one bank’s work to support mental health in local communities, Forum members’ vital role in making small businesses stronger, and a look at our contributions to communities across the country.We hope you enjoy reading this edition and please do not hesitate to share your feedback.Kevin Fromer, President and CEO, Financial Services Forum&nbsp;<h2>Penny for Your Thoughts</h2>Joan Steinberg is Morgan Stanley’s Global Head of Philanthropy and President of the Morgan Stanley Foundation.&nbsp;<h3>What is the Morgan Stanley Alliance for Children’s Mental Health and what drives this work?</h3>For more than 60 years, the Morgan Stanley Foundation has been dedicated to giving children a healthy start to life, supporting diverse communities, and harnessing the time and skills of our employees to make an impact. In February 2020, we launched the <a href="https://www.morganstanley.com/about-us/giving-back/alliance-childrens-mental-health">Morgan Stanley Alliance for Children’s Mental Health</a> in response to the mental health crisis facing our youth.We recognized that while anxiety and depression in young people have risen at alarming rates, children’s mental health remains substantially underfunded. Approximately 20% of youth experience a mental, emotional, developmental or behavioral disorder, but only around 1% of philanthropic funding is earmarked for these issues. Through the Alliance, we are combining the resources and reach of Morgan Stanley with the knowledge and experience of leading nonprofits in the mental health space. Our aim is to help deliver positive, tangible impact on the critical challenges of stress, anxiety and depression in young people.The Alliance supports organizations through growth capital, nonprofit capacity building, seed funding and thought leadership. So far, Alliance programs have reached 25 million students, families and educators globally, many of whom are from diverse and underserved groups.<h3>Tell us about the Alliance’s Innovation Awards program and the solutions it is advancing.</h3>In 2021, the Alliance launched the <a href="https://www.morganstanley.com/about-us/giving-back/childrens-mental-health-awards">Innovation Awards</a> program as a way to identify and fund mental healthcare solutions for youth across the U.S. – seeking to address the lack of both private and public investment in this issue.To date, the Alliance has provided $1 million in grants to ten groundbreaking nonprofits across the United States, and is currently reviewing applications for the next cohort of five organizations working on mental health solutions for youth in their local communities and beyond. Each award winner will receive a grant of $100,000, as well as additional support through publicity, fundraising opportunities and consultation and training with industry professionals.In response to the high volume of applications, we will be expanding the program to support more charities and hopefully effect greater change in this space. Through a capacity building platform, we will offer expert-led and peer learning sessions and networking events aimed to benefit small- to mid-sized organizations. We are encouraged by the growth of the awards program over the past few years, including the $6 million in additional funds raised by our first cohort, and hope to inspire others to join us in our mission to fund transformative solutions to the children’s mental health crisis.<h3>How else is Morgan Stanley working to support local communities?</h3>“Give Back” is one of five core values at Morgan Stanley and is very ingrained in our culture. Our employees engage in the Firm’s philanthropic programs year-round by volunteering, donating funds and collaborating with their colleagues to increase our collective impact. In 2022, our Firm, foundations and employees collectively donated more than $160 million to nonprofit organizations around the world throughout the year.We also leverage the talents and passions of our employees to strengthen our impact. A cornerstone of this work each year is <a href="https://www.morganstanley.com/about-us/giving-back/global-volunteer-month">Global Volunteer Month</a>, when we come together across the world to kick up our efforts to volunteer in the communities where we live and work.&nbsp;Since our first Global Volunteer Month 17 years ago, our employees have provided over 2.8 million hours to local charities during the campaign. We just concluded our 2023 program, and over 60K employees—nearly 75% of our Firm—devoted over 295K volunteer hours to their communities. Senior management is highly invested in the program, serving as role models by participating themselves and actively encouraging our employees to volunteer.<h2>Value Add</h2>Morgan Stanley Strategy Challenge<figure class="image image_resized" style="width:62.21%;"><img src="https://fsforum.com/a/media/morgan-stanley-value-add.png"></figure>The <a href="https://www.morganstanley.com/about-us/giving-back/strategy-challenge-nonprofit-program">Morgan Stanley Strategy Challenge</a>, our flagship pro-bono program, combines our employees’ business acumen with our value of giving back in an especially deep and substantial way. Launched in 2009, the Strategy Challenge gives Morgan Stanley employees the opportunity to consult for nonprofits and help them solve strategic, mission-critical challenges. Over an eight-to-ten-week engagement, employees from different levels and with varied skill sets leverage their expertise to provide customized analysis and implementable action plans, along with tools for future assessments and decision-making.Through the program, Morgan Stanley employees have served a total of 183 nonprofits and volunteered over 131,000 hours. Team recommendations have led to more effective business models, expanded services, productivity improvements and more—all in service of each nonprofit's mission. <a href="https://www.morganstanley.com/press-releases/strategy-challenge-winners-announcement-2023">This year’s teams</a> collaborated with nonprofits to tackle pressing societal issues, including in education, healthcare, children’s wellbeing, mental health and food insecurity.<h2>Capital Gains</h2>What we’re doing in Washington<figure class="media"><oembed url="https://www.youtube.com/watch?v=trW0UaewDWo"></oembed></figure>&nbsp;The Forum released its latest Policy Cents <a href="https://www.youtube.com/watch?v=trW0UaewDWo">video</a> featuring Forum President and CEO Kevin Fromer on the vital role played by the nation’s largest banks in supporting small businesses through lending. Watch the latest video and the rest of our series <a href="https://fsforum.com/news/category/policy-cents/1/9">here</a>.In response to the release of a proposal on capital requirements, Forum President and CEO Kevin Fromer issued a <a href="https://fsforum.com/news/financial-services-forum-capital-proposal-would-harm-u-s-economic-competitiveness">statement</a>. "The U.S. government is poised to increase the cost and reduce the availability of a wide array of services that directly support our economy,” Fromer said. “There is no justification for significant increases in capital at the largest U.S. banks and no other jurisdiction is likely to adopt the approach proposed today, which will only increase the significant disparity that already exists between U.S. and foreign bank capital requirements.”Fromer also joined Bloomberg TV to highlight the costs of higher bank capital to U.S. businesses and households. <a href="https://fsforum.com/news/a-solution-without-a-problem">Read more and watch the full interview.</a>The Forum <a href="https://fsforum.com/news/forum-comments-on-deposit-insurance-special-assessment">responded</a> to a proposal by the FDIC that seeks to recover losses to the Deposit Insurance Fund resulting from use of the Systemic Risk Exception in connection with the closures of Silicon Valley Bank and Signature Bank. The proposed special assessment on insured depository institutions neither reflects the entities that benefitted from the systemic exception determination nor differentiates between stable and unstable deposits, the Financial Services Forum said.The Forum, with the American Bankers Association, Bank Policy Institute, Institute of International Bankers, and Securities Industry and Financial Markets Association, submitted a <a href="https://fsforum.com/news/joint-trades-letter-to-federal-chair-powell-on-costs-of-higher-capital">letter</a> to Federal Reserve Chair Jerome Powell to carefully consider the costs of higher capital requirements.<h2>Our Two Cents</h2>Research from the Forum&nbsp;This year’s stress test demonstrates the robustness and resilience of our nation’s largest banks. The chart below shows Forum firms’ common equity tier 1 capital (CET1) ratio at the beginning of the stress test and at the point the CET1 reaches its minimum value of 4.5 percent.<figure class="image image_resized" style="width:55.94%;"><img src="https://fsforum.com/a/media/picture2.png"></figure>Even though the stress test subjects large banks to an economic scenario more severe than the financial crisis, the chart shows that Forum member capital levels only dip modestly, which indicates sound and resilient balance sheets. Additionally, even at their lowest points, Forum members maintain a level of capital that is three times as high as the regulatory minimum of 4.5 percent.To learn more about capital at the nation’s largest banks, go to smartbankcapital.com.&nbsp;<h2>Checking the Balance</h2>Members in the news&nbsp;Bank of America <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2023/06/bofa-to-open-financial-centers-in-9-new-markets-by-2026.html">announced</a> it will expand its financial center network into nine new markets over the next four years, bringing banking, investing, retirement, lending and small business services and solutions to more clients and communities. Through this expansion, the company will now operate financial centers in more than 200 markets across 39 states.BNY Mellon Investment Management <a href="https://www.bnymellon.com/us/en/about-us/newsroom/press-release/bny-mellon-investment-management-launches-the-bny-mellon-womenpercent27s-opportunities-etf-and-bny-mellon-innovators-etf-130332.html">announced</a> the launch of two new thematic Exchange-traded funds for investors, BNY Mellon Women's Opportunities ETF and BNY Mellon Innovators ETF. "These ETFs will enable investors to potentially benefit from themes we believe will drive economic and societal growth and progression," said&nbsp;David DiPetrillo, Head of North America Distribution at BNY Mellon Investment Management.Citi and American Airlines <a href="https://www.citigroup.com/global/news/press-release/2023/american-airlines-and-citi-enhance-the-citi_aadvantage-executive-world-elite-mastercard-with-more-benefits">announced</a> the refresh of the Citi/AAdvantage Executive World Elite Mastercard with new benefits. The new card benefits will enhance cardmembers’ travel experiences and will offer more opportunities to earn AAdvantage miles and loyalty points, as well as greater rewards for everyday travel and spending.Goldman Sachs <a href="https://urldefense.com/v3/__https:/linkprotect.cudasvc.com/url?a=https*3a*2f*2fwww.goldmansachs.com*2fmedia-relations*2fpress-releases*2f2023*2fgs-expands-visual-structuring-into-equities-crypto-and-precious-metals.html&amp;c=E,1,uRxwJ88UPvQSRmxu_3qWdaXy3c9eWW4ETWjsTMIn9ujDgbevxgnkV_ki4D4QKkV-cR_iE4tTEkPyN3SCXW9ys7LI5t-adr8thxUGNUm8E_4,&amp;typo=1__;JSUlJSUlJQ!!O2kDR7mm-zSJ!oUy16MWJPsjgqr8xm6SOl0U5JDTHTq-t3c6pcMz9xA30lZMDpNQyKDLNdfLqaTnOBYyZeCNg0hX7dmIB$">announced</a> the expansion of Visual Structuring, a tool for options price discovery and trade idea generation, available through Goldman Sachs Marquee. The bank expanded capabilities for the tool into equities, crypto and precious metals, and also launched web and Android versions in addition to the original iOS mobile application for FX launched in September.JPMorgan Chase <a href="https://www.jpmorganchase.com/news-stories/jpmorgan-chase-announces-new-business-and-philanthropic-commitments">announced</a> new philanthropic and expanded business commitments as part of its firmwide approach to addressing the housing affordability gap. The announcement marked two years into JPMorgan Chase’s&nbsp;<a href="https://www.jpmorganchase.com/news-stories/jpmorgan-chase-commitment-to-closing-the-housing-affordability-gap-for-black-and-latinx-households">$400 million, five-year commitment</a>&nbsp; to improve housing affordability and stability for underserved households. &nbsp;Morgan Stanley’s E*TRADE <a href="https://www.morganstanley.com/press-releases/power-etrade-platform-charting-enhancements">earned</a> 5.0 out of 5.0 stars and took the #1 spot for Best Mobile Investor App and Web Trading Platform from StockBrokers.com’s 2023 Online Broker Review. E*TRADE aims to enhance the financial independence of traders and investors through a powerful digital offering and professional guidance.State Street <a href="https://clicktime.symantec.com/15tSySXrkAf2eZTKEsQjj?h=v0KR5lS2qk5Gfure-g99r6d5fwVo9dwOw6focb162rI=&amp;u=https://newsroom.statestreet.com/press-releases/press-release-details/2023/State-Street-Expands-State-Street-Alpha-with-New-Front-to-Back-ETF-Capabilities/default.aspx">announced</a> that its Alpha servicing platform for institutional investment and wealth managers now supports the entire ETF (exchange traded funds) lifecycle with front, middle and back-office capabilities, with everything bolstered by The State Street Alpha Data Platform.Wells Fargo <a href="https://newsroom.wf.com/English/news-releases/news-release-details/2023/Wells-Fargo-Foundation-Awards-7.5-Million-to-Habitat-for-Humanity-to-Build-Repair-Homes/default.aspx">announced</a> a $7.5 million grant to Habitat for Humanity International to help make housing more affordable and accessible. Through the 2023 Wells Fargo Builds program, the grant funding will enable local Habitat for Humanity affiliates to build and repair more than 360 homes nationwide, including accessibility modifications to meet the needs of low-income older adults and people with disabilities.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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The Forum File, 2023 Edition #5 

Dear reader,Welcome to the latest edition of The Forum File. In this edition, we are highlighting how our members are investing in their employees throughout every stage of their careers, the Forum’s work to highlight the facts on bank capital requirements, and a look at our contributions to communities across the country.We hope you enjoy reading this edition and please do not hesitate to share your feedback.Kevin Fromer, President and CEO, Financial Services Forum&nbsp;<h2>Penny For Your Thoughts</h2>“At Goldman Sachs, our priority is to invest in our people, at every stage of their career— from attracting exceptional individuals with unique and diverse backgrounds to implementing effective talent development strategies and ensuring that all of our people have the resources they need to grow and thrive, both in and outside of the workplace.” – Jacqueline Arthur, Head of Human Capital Management&nbsp;<h3>Mental health is a growing focus for companies following the COVID-19 pandemic. How is Goldman Sachs responding?</h3>We believe we are only as strong as our people, as it is the people of Goldman Sachs who make our firm such an extraordinary organization. Our comprehensive benefits and wellness programs speak to our long-standing commitment to supporting our people and their families at every stage of their careers at Goldman Sachs. Our growing suite of benefits and wellness offerings include our Pathways to Parenthood program, our resilience programming, expanded leave options and financial wellness resources.It’s important that our people know about these resources and feel that they can have an open dialogue about mental health. We are developing a global cohort of Mental Health First Aiders – colleagues who receive training and help connect our people to firm resources. Our Employee Assistance and Critical Health Solutions programs provide access to confidential counseling both on-site and outside the firm, as well as support to navigate access to quality care.<h3>What progress is Goldman Sachs making on diversity, equity and inclusion?</h3>Accountability is at the center of our efforts at Goldman Sachs, and we are focused on attracting and retaining diverse, extraordinary talent. We have laid out aspirational goals as a framework for the progress we plan to make in increasing diverse professionals at all levels of the firm. One of the areas where we have been investing significantly is diversity recruiting and reaching a more diverse array of candidates. Those efforts include our&nbsp;<a href="https://www.goldmansachs.com/careers/professionals/returnship/">Returnship</a>,&nbsp;<a href="https://www.goldmansachs.com/media-relations/press-releases/2023/gs-hosts-hbcu-students-at-third-annual-market-madness-competition.html">HBCU Market Madness</a>,&nbsp;<a href="https://www.goldmansachs.com/careers/professionals/neurodiversity-hiring-initiative.html">Neurodiversity Hiring initiatives</a>&nbsp;and the&nbsp;<a href="https://www.goldmansachs.com/careers/professionals/veterans-integration-program.html">Veterans Integration Program,</a>&nbsp;among others.We are proud to say that these efforts have already resulted in us achieving our campus analyst hiring goals and we are welcoming a new cohort of analysts from these programs this year. Our recruiting efforts have allowed us to create a diverse pipeline of talented individuals at all levels, highlighted by our recent promotion classes of partners and managing directors – which were the most diverse in the firm’s history. We know driving progress towards these goals requires new and innovative approaches, and while we have made strides, we recognize there is more work to be done.<h3>How is Goldman Sachs supporting and investing in its people?&nbsp;</h3>First and foremost, Goldman Sachs is focused on&nbsp;investing in our talent, including&nbsp;by providing&nbsp;our people with new and&nbsp;compelling opportunities to continue to grow and develop in their careers here.&nbsp;Another way we ensure that we engage the best talent from a diverse set of experiences is by creating programming designed to open a multitude of pathways to Goldman Sachs and by recruiting individuals from areas outside of finance. Among these initiatives is our&nbsp;<a href="https://www.goldmansachs.com/careers/professionals/gs-bridge-to-banking.html">Bridge to Banking</a> program, an opportunity for a diverse set of experienced professionals to transition their prior work experience to a career in investment banking.&nbsp;Our twice-annual GS People Pulse survey is particularly valuable in hearing from our people directly. An important take-away from the survey has been ensuring regular career discussions between managers and their team members – that is now codified as the Three Conversations at GS, where everyone participates in a goal-setting conversation, mid-year check in and end of year feedback discussion.&nbsp;<h2>Value Add</h2>Analyst Impact Fund&nbsp;<figure class="image"><img src="https://fsforum.com/a/media/inteleheath-640x360-aud.webp"></figure>&nbsp;To date, Goldman Sachs has deployed $4 million in grants to nonprofit organizations driven by innovative ideas from our analysts.&nbsp;The &nbsp;<a href="https://www.goldmansachs.com/citizenship/goldman-sachs-gives/meet-the-grantees/analyst-impact-fund-2022/">Analyst Impact Fund</a>&nbsp;was designed to democratize our firm’s philanthropic giving and allow our analysts to have real and meaningful impact in the communities where we live and work. The global competition not only expands the firm’s philanthropic reach, but also serves as an important tool to engage our analysts, as they collaborate with peers across the firm to identify non-profits that are tackling global challenges and pitch innovative solutions to the firm’s leadership. They are also given the opportunity to engage with industry leaders both inside and outside of the firm.Winning teams are awarded grants from our philanthropic fund, Goldman Sachs Gives, for their organizations. In seven years of the program, over 5,000 analysts across 48 offices have participated. In 2022, a record number of analysts from across the globe pitched more than 350 non-profits that address a range of important issues, from healthcare access and refugee support to inclusive growth.&nbsp;&nbsp;<h2>Capital Gains</h2>What we’re doing in Washington&nbsp;Following a speech by the Federal Reserve vice chair for supervision, Forum President and CEO Kevin Fromer <a href="https://fsforum.com/news/forum-calls-on-regulators-to-carefully-consider-capital-changes">called</a> on regulators to carefully consider capital changes, emphasizing that “capital isn’t free,” and that “further capital requirements on the largest U.S. banks will lead to higher borrowing costs and fewer loans for consumers and businesses – slowing our economy and impacting those on the margin hardest.”In response to the Federal Reserve Board’s 2023 stress test results Forum President and CEO Kevin Fromer issued a <a href="https://fsforum.com/news/stress-tests-confirm-strong-capital-positions-of-largest-u-s-banks">statement</a> emphasizing how the “stress test results reinforce that additional required capital is not justified. The reforms of the post-Dodd-Frank period have achieved the goals of a stronger, safer banking system.”Following a recent speech on Basel capital proposals by the FDIC chairman, Forum President and CEO Kevin Fromer issued a <a href="https://fsforum.com/news/forum-ceo-comments-on-bank-capital-requirements">statement</a> regarding capital requirements and the largest U.S. banks: “As the chairman of the Federal Reserve has indicated, capital levels in the U.S. banking system are strong, particularly at the eight U.S.-based global systemically important banks. Furthermore, higher capital levels need to be justified because of the tradeoffs.” Fromer highlighted how these large banks have acted as a source of strength through periods of stress, and that costs to the economy after raising capital requirements would be nearly instantaneous.In anticipation of the U.S. implementation of Basel III Finalization, which could significantly raise requirements for the largest U.S. banks, the Forum <a href="https://fsforum.com/news/capital-requirements-for-the-largest-u-s-banks-separating-fact-from-fiction">dispelled</a> five myths with the facts:&nbsp;Myth #1: The largest U.S. banks need more capital.Fact: Policymakers have regularly attested to the strength and resiliency of the largest U.S. banks.&nbsp;Myth #2: Raising capital requirements on the largest U.S. banks does not impact the economy.Fact: Capital is connected to activity throughout the economy.&nbsp;Myth #3: Raising bank capital is not costly because, whatever the size of the capital increase, a “long transition period” will be provided.Fact: Costs are nearly instantaneous despite government transition periods.&nbsp;Myth #4: New and higher Basel III Finalization capital requirements will only impact large banks’ trading activities.Fact: New and higher capital requirements will impact a broad range of functions at the largest banks, including lending.&nbsp;Myth #5: Large banks only serve large corporations.Fact: The nation’s largest banks hold roughly $85 billion in small business loans, invest in CDFIs and MDIs, and meet two-thirds of the funding needs of other financial institutions.&nbsp;<h2>Our Two Cents</h2>Research from the Forum&nbsp;The BankNotes Blog Spotlighted:<ul><li>The safety and stability of the largest U.S. banks by <a href="https://fsforum.com/news/fdic-risk-review-the-largest-banks-remain-well-diversified">highlighting</a> the exceptional diversification of their portfolios in three key loan markets: agriculture, commercial real estate, and housing.</li><li>How unnecessarily <a href="https://fsforum.com/news/too-much-of-a-good-thing-unnecessarily-raising-capital-requirements-on-the-largest-banks-will-exact-a-real-economic-toll">increasing</a> capital requirements for the nation’s largest banks will result in large costs for the economy in terms of increased borrowing costs and reduced access to credit without any significant improvement in resiliency.</li><li>A new report from PwC, <a href="https://www.pwc.com/us/en/industries/financial-services/library/basel-iii-endgame.html#:~:text=Basel%20III%20Endgame%20is%20a,%2Dweighted%20assets%20(RWA)">Basel III Endgame: The next generation of capital requirements</a>, that <a href="https://fsforum.com/news/a-holistic-review-of-large-bank-capital-findings-from-a-new-report">finds</a> that capital at the largest banks has been strengthened considerably and is at levels broadly consistent with recommendations offered by independent research studies.</li></ul>&nbsp;<h2>Checking the Balance</h2>Members in the news&nbsp;Bank of America <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2023/06/bofa-surpasses--500-million-in-equity-investments-to-support-min.html">announced</a> it has committed more than $500 million of equity investments to minority-led funds, more than doubling its initial $200 commitment. This investment further supports diverse entrepreneurs, helping advance racial equality and economic opportunity.BNY Mellon <a href="https://www.bnymellon.com/us/en/about-us/newsroom/press-release/bny-mellon-mocafi-to-bring-digital-payments-innovation-to-underserved-communities-across-the-us-130339.html">announced</a> a strategic alliance with MoCafi, a Black-founded fintech platform leading financial empowerment for traditionally underserved communities, to extend payment options to unbanked and underbanked communities in the United States. BNY Mellon's Treasury Services business will now provide federal, state and local governments, as well as corporate clients, with a digital disbursement payment service that reaches individuals without current access to basic financial services through MoCaFi's offering.Citi <a href="https://www.citigroup.com/global/news/press-release/2023/citi-hires-veteran-owned-firms-as-joint-lead-managers-for-recent-3-2-billion-bond-issuance">announced</a> that nine Veteran-owned firms acted as joint lead managers of a $3.2 billion bond issuance. This partnership strengthens Citi’s commitment to providing opportunities to the Veteran community. Since 2015, Citi has worked on approximately $200 billion in bond issuances with more than 30 firms owned by Veterans, women, or underrepresented minorities who have received more than $50 million in fees.&nbsp;Goldman Sachs recently <a href="https://www.goldmansachs.com/media-relations/press-releases/2023/gs-hosts-hbcu-students-at-third-annual-market-madness-competition.html">hosted</a> its third-annual Market Madness competition, the culmination of its HBCU Possibilities Program, a four-month training in finance fundamentals from Goldman Sachs professionals. The firm awarded $5 million in grants in total, with Spelman College taking home first place and a $1 million grant. The Market Madness: HBCU Possibilities Program is a core component of Goldman Sachs’ $25 million, five-year commitment to Historically Black Colleges and Universities.JPMorgan Chase <a href="https://www.jpmorgan.com/news/jpm-launches-sustainable-investment-data-solutions-for-institutional-investors">announced</a> the launch of its Sustainable Investment Data Solutions for institutional investors. Investors will have access to industry-leading datasets allowing them to readily extract value from sustainable investment data.&nbsp;Morgan Stanley in May <a href="https://www.morganstanley.com/press-releases/strategy-challenge-winners-announcement-2023">completed</a> its 14th annual Strategy Challenge, the firm’s flagship pro bono program that brings together rising talent to help nonprofit organizations solve strategic, mission-critical challenges. Over 10 weeks, Morgan Stanley employees provided consulting services to 15 nonprofits. The challenge culminated in events where teams presented their recommendations. The winning U.S. team collaborated with Meeting Essential Needs with Dignity, a nonprofit focused on increasing access to fresh and healthy food for food insecure families in Essex County, New Jersey.State Street <a href="https://newsroom.statestreet.com/press-releases/press-release-details/2023/State-Street-Partners-with-Diverse-Firms-to-Underwrite-2-Billion-of-Senior-Unsecured-Debt/default.aspx">partnered</a> with four diverse firms to issue $2 billion of senior unsecured debt. The offering marked State Street’s eighth consecutive offering where the underwriting syndicate has been structured in a manner consistent with State Street’s inclusion, diversity and equity strategy. “We remain focused on increasing our partnership with diverse counterparts while also increasing representation and opportunities across our industry and in our communities,” said Kimberly Detrask, Treasurer at State Street Corporation.Wells Fargo <a href="https://newsroom.wf.com/English/news-releases/news-release-details/2023/UnidosUS-Launches-HOME-Initiative-to-Create-Four-Million-Latino/default.aspx">announced</a> that it is the anchor funder of UnidosUs’ new initiative, HOME (Home Ownership Means Equity), a new initiative that seeks to influence systemic change and catalyze the creation of four million new Latino homeowners by 2030. Wells Fargo’s $10 million investment will support UnidosUs’ HOME initiative for expanding marketing opportunities and providing resources for potential homeowners as they navigate the home-buying process.&nbsp;

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The Forum File, 2023 Edition #4

The Forum File

CONTACT: Brigid Richelieu(202) 660-2569brichelieu@fsforum.com&nbsp;&nbsp;Washington, D.C. – Industry leaders, policy experts, and government officials gathered Tuesday for the Financial Services Forum Summit, featuring discussions on American competitiveness, capital and the economy, migration of risk in the financial sector, and innovation inside banks.Click below to see key moments from each panel. Full recordings are available <a href="https://youtube.com/playlist?list=PLrk0NBVU8wNDiugNPTEXAXsSBVIwDKoTP&amp;si=WuiTL0yft4YFJf6P">here</a>.&nbsp;<h4><a href="https://youtu.be/xMMKf2zDtkI">A Conversation with Secretary Gina Raimondo</a></h4>In a wide-ranging conversation with State Street Chairman and CEO Ron O’Hanley, Commerce Secretary Gina Raimondo talked about American competitiveness, stating: “Our capital markets, our entrepreneurs, our innovation [are] the envy of the world. That allows us to compete.” Secretary Raimondo also discussed her recent visit to China, calling the conversations between U.S. and Chinese officials “candid,” but she noted that U.S. companies still are concerned with investing in China: “I don’t know if we will solve any problems by talking. I do know we won’t if we don’t talk.”&nbsp;<div class="raw-html-embed"><iframe width="560" height="315" src="https://www.youtube.com/embed/xMMKf2zDtkI?si=ny8kq7F9U1ScrpD3" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>&nbsp;<h4><a href="https://youtu.be/qAfcmRsX9xs">Capital and the State of the Economy</a></h4>Former Fed Vice Chair for Supervision Randal Quarles, American Action Forum’s Doug Holtz-Eakin, and Goldman Sachs’s Sheara Fredman discussed the strength of capital at the largest U.S. banks and raised concerns regarding the economic impact of increasing capital requirements. “The system is at an optimal level of capital now, and materially increasing the level of capital in the system will result in a cost to economic dynamism,” Quarles said.&nbsp;<div class="raw-html-embed"><iframe width="560" height="315" src="https://www.youtube.com/embed/qAfcmRsX9xs?si=o2nrhqywnoBdYHlr" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>&nbsp;<h4><a href="https://youtu.be/ogTRia8sJS4">Migration of Risk Within the Financial Sector</a></h4>In a discussion on nonbank financial institutions and the migration of risk within the financial sector, panelists Richard Berner from New York University, Hilary Allen from American University, and Karen Petrou from Federal Financial Analytics, Inc. discussed how increasing capital requirements will accelerate the movement of risk outside of the banking sector and discussed supervisory needs of nonbank financial institutions. “We need a big rethink about the way institutions that aren’t banks, but which engage in activities that might cause risks, are overseen and supervised,” Berner said. “If we identify risk that is similar, we ought to have the same supervisory outcome for managing those risks.” Petrou noted that increasing bank requirements while knowing it will lead to a movement of risk to less regulated firms, is “a very significant dereliction of long-term duty.” Of the migration, she said, “bit by bit, it’s changing the basic business of banking and the model as a whole.”&nbsp;<div class="raw-html-embed"><iframe width="560" height="315" src="https://www.youtube.com/embed/ogTRia8sJS4?si=coi9ELlcUwmQOqcP" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>&nbsp;<h4><a href="https://youtu.be/Dkb78vA4ZA0">Innovation Inside Large Banks</a></h4>JPMorgan Chase’s Aaron Iovine, State Street’s Justin McCormack, and Goldman Sachs’s Lee Brenner discussed the innovations that are reshaping the banking landscape and how these advances interact within the current regulatory framework in a conversation moderated by Davis Polk’s David Portilla. “There’s an underlying theme to how financial institutions look at innovation as a whole, and that is risk management,” said Iovine.&nbsp;<div class="raw-html-embed"><iframe width="560" height="315" src="https://www.youtube.com/embed/Dkb78vA4ZA0?si=e1_5oSxaJk4Duz64" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe></div>&nbsp;&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, a competitive global marketplace, and a sound financial system. &nbsp;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> &nbsp;

ICYMI: Financial Services Forum Summit 2023 Brings Together Leaders to Discuss Key Issues for Banking Industry and Global Economy

Basel proposal lacks publicly available data and analysis required by lawWashington, D.C. – The banking agencies’ Basel proposed rule violates the Administrative Procedure Act by relying on data and analyses that the agencies have not made available to the public, the Bank Policy Institute, the American Bankers Association, the Financial Services Forum, the Institute of International Bankers, the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fbpi.us7.list-manage.com%2ftrack%2fclick%3fu%3dfaf7489e1426ec7870b0a00f0%26id%3d536a241777%26e%3d1b85cdf2b6&amp;c=E,1,rFKCCai6YdNTkweXNKY6UOB7DhI3DyRAp5_x8OwK7y3LbunaoHC1x34BUeLr9EyzDbjMnz1_b5XJd5VMAoee8QluAUXpGpGLHjwegMX9EebBAJCKUYMI2wzZD9K9&amp;typo=1">wrote in a letter</a> today. In addition to omitting necessary information from the proposed rule, the agencies have also announced that they plan to collect additional data which they will use to calibrate the final rule — a move that also fails to comply with the law because the public would be denied the ability to review the data used in the rulemaking. The trade associations called on the agencies to remedy these violations of the law by publicly disclosing any and all evidence and analyses the agencies relied on or plan to rely upon — and then re-proposing the rule with a new 120-day comment period.What we are saying: “The agencies cannot fill in the blanks in the final rule. Instead, to the extent the agencies intend to collect and analyze further data on which to base some or all of their rulemaking in this area, they must suspend the current open rulemaking, complete any data collection and analysis necessary to support their crafting and calibration of the rule, re-propose the rule in light of the additional analyses and data and make that information available to the public and then allow commenters an opportunity to respond.&nbsp; Any other approach would violate the agencies’ duty to identify and make available for public review and comment the technical studies and data on which any rule is based,” the trade association wrote in their letter.Legal requirements:&nbsp; The Proposed Rule violates basic legal obligations of the APA.&nbsp; When proposing a rule, agencies must identify and make available all data and analysis the agencies used to develop the proposal so that the public has a meaningful opportunity to consider and respond to the agencies’ rationale through the public comment process.&nbsp; The agencies have not done so here.Deficiencies in the proposed rule: The letter provides multiple examples where the proposed rule relies on data, analysis, and methodologies that have been withheld from the public view.&nbsp; It also notes the use of impermissibly vague references to “supervisory experience” — in lieu of specific data or analysis — to justify many elements of the proposal.&nbsp; Furthermore, the letter provides examples of instances in the rule where the agencies simply assert a proposition with no citation, evidence or analysis to back it up whatsoever.&nbsp; These omissions deprive the public of a meaningful opportunity to consider and comment on the validity and prudence of the proposal. The agencies are obligated under the law to remedy these legal deficiencies.-30-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 American Bankers AssociationThe American Bankers Association is the voice of the nation’s $23.5 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2.1 million people, safeguard $18.6 trillion in deposits and extend $12.3 trillion in loans.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, a competitive global marketplace, and a sound financial system.About the Institute of International BankersThe Institute of International Bankers (IIB) represents internationally headquartered financial institutions from over thirty-five countries around the world doing business in the United States. Its members consist principally of international banks that conduct U.S. operations through branches and agencies, bank subsidiaries, and broker-dealer subsidiaries. The mission of the IIB is to help resolve the many special legislative, regulatory, and tax issues confronting internationally headquartered financial institutions that engage in banking, securities, and/or insurance activities in the United States.About Securities Industry and Financial Markets AssociationSIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit <a href="https://www.sifma.org/">http://www.sifma.org</a>

Banking Trade Associations Call on Banking Agencies to Re-Propose Basel Rule

CONTACT: Barbara Hagenbaugh(202) 457-8783<a href="mailto:bhagenbaugh@fsforum.com">bhagenbaugh@fsforum.com</a>&nbsp;Financial Services Forum CEO highlights migration of risk in “Banking with Interest” podcastWashington, D.C. &nbsp;– Financial Services Forum President and CEO Kevin Fromer spoke to “Banking with Interest” host Rob Blackwell to discuss the potential implications of a proposal to increase capital requirements for the largest U.S. banks. Fromer highlighted in the Intrafi podcast how higher requirements would push activities outside the regulated banking sector, harm consumers and businesses, and reduce the competitiveness of the U.S. economy.“You have to go back to the why -- why do you need to constrain banks and their customers?” Fromer said. “There are real world impacts of these decisions.”<figure class="image image_resized" style="width:84.88%;"><a href="https://podcasts.apple.com/us/podcast/the-case-against-higher-bank-capital-requirements/id1506774121?i=1000627588419"><img src="https://fsforum.com/a/media/kevin-podcast-2.jpg"></a></figure><a href="https://podcasts.apple.com/us/podcast/the-case-against-higher-bank-capital-requirements/id1506774121?i=1000627588419">(Click Here to Listen to Interview)</a>Following are highlights from the interview:On the Migration of Risks in the Financial System:“You could be making the banks incrementally safer and you could be making the rest of the financial system less safe. You could be creating a situation where there's more risk migrating outside of the banks and into the nonbank sector. That hasn't been covered off by regulation, that is something that regulators here and at the international level are struggling with right now.“And I don't think the next significant crisis that relates to the financial system is going to emanate from the banking sector. It's going to emanate from that less regulated, nonbank sector. So I think that is a broad concern. In other words, what kind of a financial system do you want? What kind of a banking system do you want? Is it right for our system here in the United States? Does it help ensure that we are competitive as a nation over the long term? Those are the kinds of questions that you have to think about when you're presented with a proposal that seems to unnecessarily raise capital.”On the Cost of Higher Capital Requirements:“None of these institutions and their leaderships are at all complacent,” Fromer said, noting the support the largest U.S. banks have provided the broad economy. “I think they've been very assertive during times when the country needed to have the support of the banking system, to offer that support and to be strong enough to offer that support. I think that's the broad concern, why are we raising capital to this extent for purposes of meeting this international standard? Are we doing so contrary to the implementation designs of other jurisdictions … and what is the cost of this type of proposal to the consumers, the businesses, the institutional investors in this country? And just broadly, (for) the economy at large, is this a sensible thing to do right now?”On the Gap Between U.S. and EU Implementation:“There's no question that a Basel process that was intended to create a level playing field with respect to capital requirements has quite perversely resulted in an unlevel playing field. And that system, to me, seems broken when we have those kinds of outcomes. The U.S. proposal that we're dealing with right now is again going to build on that trend where the U.S. is proposing to be super equivalent, to have rules in place for its institutions that exceed the standard in the Basel 3 Finalization proposal coming out six years ago. So we're going to go from an unlevel playing field to an even wider gap, wider spread, more unlevel playing field.”On the Lack of Connection to the Midsize Bank Turmoil:“I don't think there's any relationship whatsoever between what happened to the regional banks and Basel 3 Finalization. There's literally no nexus.”&nbsp;Please see the Forum’s <a href="https://fsforum.com/a/media/capital-and-u.s.-economy.pdf">fact sheet</a> for more information on capital and the largest U.S. banks and the potential impact of the regulators’ capital proposal.&nbsp;Learn more, including what policymakers and others have to say about the strong capital positions at the largest U.S. banks, at <a href="smartbankcapital.com">smartbankcapital.com</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. 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, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.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>&nbsp;

“What kind of a banking system do you want?” 

Press Releases

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Kevin Fromer

President and Chief Executive Officer

This op-ed was featured in the <a href="https://www.americanbanker.com/opinion/dont-delay-public-input-on-feds-review-of-capital-requirements">American Banker's BankThink.&nbsp;</a>&nbsp;<blockquote>Last month, Federal Reserve Vice Chair for Supervision Michael Barr outlined the Federal Reserve's agenda to make the financial system safer and fairer by improving banks' safety and soundness. Barr <a href="https://www.federalreserve.gov/newsevents/speech/barr20220907a.htm">called for a holistic review</a> of the bank capital framework, including a review of leverage and capital requirements for large banks. We welcome the Fed's review. And we urge the Fed to be more transparent about it.</blockquote>Mr. Barr is right. Currently, the U.S. capital framework is comprised of a dizzying array of moving parts: risk-weighted assets, stress capital buffers, surcharges on global systemically important banks, countercyclical buffers and leverage buffers, just to name a few. All these requirements are implemented separately, sometimes with several years between rules. No singular element of the capital regime determines overall capital requirements — rather, the various constraints knit together in complex and unpredictable ways to determine the overall amount of capital required of large banks. Given that capital requirements strongly influence the cost and amount of lending by banks in our economy, getting the mix of requirements right is critical, as is transparency around this process.&nbsp; Right now, all we know is that the Fed expects to complete its review this fall, and will only seek public input on proposed capital rules that are informed by the findings of the review after it is complete. We don't know much about how the review is being conducted, but we do know it is happening quickly — and without public input. But waiting for public input until so late in the game — once the direction of travel is set — is too late and risks consequential errors based on a lack of full information. The Federal Reserve should commit to seeking public feedback on its holistic review of the capital framework before the review is finalized and before any subsequent capital rules are proposed. Public feedback is crucial for several reasons.&nbsp; First, regulators' analysis can be improved by taking input from a variety of stakeholders, including academics and practitioners with significant expertise in bank capital.&nbsp; Second, public input will help ensure an evenhanded approach in reviewing the capital framework. A review solely conducted by regulators runs the risk of tipping the scales in a direction confirming existing policy preferences, even if there may be data supporting other perspectives.&nbsp; For example, studies have found that central bank-sponsored research on quantitative easing's effectiveness is more positive than other research on the topic. A full, open review of the capital framework soliciting input from a wide array of stakeholders will help ensure a thorough, unbiased and informed assessment.&nbsp; Most important, any study of the capital framework either implicitly or explicitly embeds a value judgment about the appropriate trade-off between economic growth and financial stability. Regulators are charged with maintaining financial stability, but they are not solely in charge of determining how society balances safety versus growth. Finding the right balance between growth and stability requires weighing the costs and benefits of additional financial stability measures against the impact on job creation and living standards. That debate must be informed by the views of all relevant stakeholders. The Federal Reserve and other agencies reviewing regulations routinely do so with public input. At least every 10 years, the bank regulatory agencies are <a href="https://egrpra.ffiec.gov/">required</a> by federal law to gather public input and review existing regulations. During the last cycle, regulators traveled the country for in-person meetings and collected written feedback. At one of these meetings, Federal Reserve Board Chairman Jay Powell <a href="https://www.federalreserve.gov/newsevents/speech/powell20150204a.htm">explained that</a> creating balanced, effective and thoughtfully calibrated regulations to avoid undue burden requires input from stakeholders. Researchers' review of the capital framework should also adhere to existing transparency standards for published academic research — and all of the data and analysis should be made public. The economics literature is replete with examples of studies that came to drastically incorrect conclusions because of simple data errors that were later uncovered by other researchers. Most academic journals now require that the data and programs used to conduct any analysis be made public before the results are published.&nbsp; The stakes are too high to accept even a small probability of an errant mistake. A comprehensive review of the capital framework and soliciting public input are necessary to ensure a safe and sound banking system in balance with the promotion of economic growth. Doing one without the other will be counterproductive — and risks reaching an outcome that does not reflect the needs of our economy.&nbsp;

BankThink Op-ed: Don't Delay Public Input on Fed's Review of Capital Requirements

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;<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;<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

Opinion

Letters

Congressional Testimony: Financial Services Forum Urges Congress to Examine the Negative Impacts of the Proposed Capital Rule

Request for Re-Proposal of Regulatory Capital Rule to Remedy Administrative Procedure Act Violations

Joint Trades Letter on SEC Safeguarding Proposal 

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Big Banks and Their Role in Small Business Lending  

Forum President and CEO Kevin Fromer discusses the vital role played by the nation's largest banks in supporting small businesses through lending, and the significance of meeting the needs of American companies as the foundation for a strong economy. 

Video

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Understanding the Role of Big Banks in American Competitiveness

Forum Chief Economist Sean Campbell discusses the important role that the nation’s biggest banks play in helping American companies compete internationally and explains how American international competitiveness is critical to ensuring the success and vibrancy of the U.S. economy.

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Large Bank Capital and the Economy

Forum Chief Economist Sean Campbell explains capital regulations for large U.S. banks and how those regulations impact small businesses, consumers, and the U.S. economy.

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Policy Cents

Fact Sheet

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Capital and the U.S. Economy

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State Street Corporation

Ron is chairman and chief executive officer of State Street Corporation. He is also a member of State Street Corporation’s Board of Directors. Ron was previously president and chief operating officer of State Street Corporation, and before that president and chief executive officer of State Street Global Advisors, the investment management arm of State Street Corporation. He joined State Street in 2015. Prior to State Street, Ron was president of Asset Management &amp; Corporate Services for Fidelity Investments, responsible for all Fidelity asset management organizations and Fidelity’s corporate functions and enterprise technology. He served at Fidelity from 2010 to 2014. Prior to joining Fidelity, Ron served as president and chief executive officer of BNY Mellon Asset Management in Boston, a position to which he was named in 2007. During this time, he also served as vice chairman of Bank of New York Mellon Corporation and was a member of its Executive Committee. Additionally, Ron oversaw all of Bank of New York Mellon’s activities in Asia. Prior to the 2007 merger of Bank of New York and Mellon, he was vice chairman of Mellon Financial Corporation and president and chief executive officer of Mellon Asset Management. He served at Mellon and Bank of New York Mellon from 1997 to 2010. Prior to Mellon, Ron was with McKinsey &amp; Company, Inc., from 1986 to 1997 and was elected a partner in 1992. He founded the Investment Management practice worldwide and was co-founder and co-leader of the firm’s North American Personal Financial Services practice. Additionally, he was a member of the Worldwide Property &amp; Casualty Insurance practice. During his tenure with McKinsey, Ron served in the firm’s Boston, New York, and Stockholm offices. Ron received his Bachelor of Arts degree in political science from Syracuse University in 1980 and his Master of Business Administration from Harvard Business School in 1986. Ron serves on the boards of Unum Corp. and Rhode Island Commerce Corporation. He also serves on the boards of Beth Israel Lahey Health, The Boston Foundation, IYRS School of Technology and Trades, Syracuse University and WBUR. Ron’s philanthropic and civic interests include corporate governance, retirement/healthcare policy and funding, education, and climate. He has led several initiatives on gender equality. Ron is a frequent speaker and writer, and an avid offshore sailboat racer.

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Ronald O'Hanley

State Street Corporation Chairman And Chief Executive Officer, Forum Chair

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Citigroup

Jane Fraser is the Chief Executive Officer of Citi, the world's most global bank, serving millions of consumers, businesses and institutions across 160 countries and jurisdictions. She is the first female CEO in the firm’s history. Jane has deep experience across Citi’s consumer and institutional businesses and, in many ways, she helped shape Citi into the company it is today. Before becoming CEO in February 2021, she was President of Citi and CEO of the Global Consumer Bank, responsible for all of Citi’s Consumer businesses, including Retail Banking and Wealth Management, Credit Cards, Mortgage and Operations and Technology in 19 markets. Before that, she was the Chief Executive Officer of Citigroup Latin America from 2015 to 2019. From 2013 to 2015, she was the Chief Executive Officer of the U.S. Consumer and Commercial Banking and CitiMortgage. From 2009 to 2013, Jane served as the Chief Executive Officer of Citi's Global Private Bank. Prior, Jane was the Global Head of Strategy and Mergers & Acquisitions for Citi from 2007 to 2009. She joined Citi in 2004 in the Corporate and Investment Banking division.
Before joining Citi, Jane was a Partner at McKinsey & Company. She started her career at Goldman Sachs in the Mergers & Acquisitions department in London and then worked for Asesores Bursátiles in Madrid, Spain. Jane serves as a Board Member for the Business Roundtable and the Council on Foreign Relations. She is Vice Chair for the Partnership for New York City and a member of Harvard Business School’s Board of Dean’s Advisors, the Stanford Global Advisory Board and the Economic Club of New York. Jane has an M.B.A. from Harvard Business School and an M.A. in economics from Cambridge University. She is married with two children.

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Jane Fraser

Citigroup Chief Executive Officer, Forum Vice Chair

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Bank Of America

Brian Moynihan leads a team of more than 200,000 employees dedicated to making financial lives better for people, companies of every size, and institutional investors across the United States and around the world.

Bank of America is recognized as a top employer by Working Mother magazine and Military Times. The company is also listed on Fortune magazine’s list of the Best Workplaces for Diversity and the Best Workplaces for Parents. It was also named one of the Best Places to Work for Disability Inclusion by the U.S. Business Leadership Network and the American Association of People with Disabilities. In 2018, Euromoney recognized Bank of America as the World’s Best Bank and the World’s Best Bank for Diversity and Inclusion, as part of their annual Global Awards for Excellence. Bank of America was also named the 2019 Catalyst Award winner, honored for supporting the continued development, empowerment and advancement of women in the company and around the world.

Moynihan participates in several organizations that focus on economic and market trends, including the World Economic Forum International Business Council, the Financial Services Forum, the Bank Policy Institute (chair), the Business Roundtable, and the American Heart Association CEO Roundtable (co-chair). He is also a member of the Federal Advisory Council of the Federal Reserve Board.

Moynihan leads the company’s Global Diversity and Inclusion Council and is a member of the museum council for the Smithsonian’s National Museum of African American History and Culture. Moynihan is also a member of the Brown University Corporation’s Board of Fellows and the Congressional Medal of Honor Foundation Board.

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Brian Moynihan

Bank Of America Chairman Of The Board And Chief Executive Officer

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BNY Mellon

Robin Vince is President and Chief Executive Officer of BNY Mellon and a member of its Board of Directors. Previously, he was Vice Chair of BNY Mellon and CEO of Global Market Infrastructure. In that role, he oversaw BNY Mellon’s Clearance and Collateral Management, Treasury Services, Markets and Execution Services and Pershing businesses.

Prior to joining BNY Mellon in October 2020, Robin was the Chief Risk Officer of Goldman Sachs and a member of the Management Committee. He joined Goldman Sachs in 1994 and held many leadership roles, including Treasurer, Head of Operations, Head of Global Money Markets, COO of the EMEA region and CEO of Goldman Sachs International Bank, among others. He served on several key subsidiary boards and governance committees. He was named managing director in 2002 and partner in 2006.

Robin is a member of National Geographic Society's Hubbard Council and serves on the Board of Advisors of The Hospital for Special Surgery.

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Robin Vince

BNY Mellon Chief Executive Officer

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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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David Solomon

The Goldman Sachs Group, Inc. Chairman and Chief Executive Officer

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JPMorgan Chase & Co.

Jamie Dimon is Chairman of the Board and Chief Executive Officer of JPMorgan Chase & Co., a global financial services firm with assets of $2.5 trillion and operations worldwide. The firm is a leader in investment banking, financial services for consumers, small business, commercial banking, financial transaction processing and asset management.

Dimon became CEO on January 1, 2006 and one year later also became Chairman of the Board.  He was named President and Chief Operating Officer upon the company’s merger with Bank One Corporation on July 1, 2004. Dimon joined Bank One as Chairman and CEO in 2000.

Dimon began his career at American Express Company.  Next, he served as Chief Financial Officer and then President at Commercial Credit, which made numerous acquisitions and divestitures, including acquiring Primerica Corporation in 1987 and The Travelers Corporation in 1993. Dimon served as President and Chief Operating Officer of Travelers from 1990 through 1998 while concurrently serving as Chief Operating Officer of its Smith Barney Inc. subsidiary before becoming co-Chairman and Co-CEO of the combined brokerage following the 1997 merger of Smith Barney and Salomon Brothers.  In 1998, Dimon was named President of Citigroup Inc., the global financial services company formed by the combination of Travelers Group and Citicorp.

Dimon earned his bachelors degree from Tufts University and holds an MBA from Harvard Business School. He serves on the boards of directors of a number of non-profit institutions including the Clearing House and Harvard Business School. Additionally, he is the Chairman of the Business Roundtable and serves on the executive committee of the Business Council and the Partnership for New York City, and is a member of the Financial Services Forum, Financial Services Roundtable and Council on Foreign Relations.

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Jamie Dimon

JPMorgan Chase & Co. Chairman And Chief Executive Officer

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Morgan Stanley

Mr. Gorman is Chairman and CEO of Morgan Stanley.

Mr. Gorman became CEO in January 2010 and Chairman in January 2012. He joined the Firm in February 2006 and was named Co-President in December 2007.

Before joining Morgan Stanley, Mr. Gorman held a succession of executive positions at Merrill Lynch. Prior to this, he was a senior partner of McKinsey & Co. and began his career as an attorney in Melbourne, Australia.

Among his civic activities, Mr. Gorman serves as a Director of the Federal Reserve Bank of New York and the Council on Foreign Relations, and is a member of the Board of Overseers of the Columbia Business School, the Monetary Authority of Singapore International Advisory Panel, the Business Council, and the Board of the Institute of International Finance.

He formerly served as President of the Federal Advisory Council to the U.S. Federal Reserve Board, Co-Chairman of the Partnership for New York City, Chairman of the Board of the Securities Industry and Financial Markets Association and Co-Chairman of the Business Committee of the Metropolitan Museum of Art.

Mr. Gorman, who was born in Australia, earned a B.A. and Law degree from the University of Melbourne and an M.B.A. from Columbia University.

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James Gorman

Morgan Stanley Chairman And Chief Executive Officer

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Wells Fargo & Company

Charles W. Scharf is chief executive officer and president, and a member of the Board of Directors of Wells Fargo & Company.

A financial services veteran with 24 years of experience in leadership roles in the banking and payments industries, Charlie served as chief executive officer of Bank of New York Mellon from July 2017 to October 2019 and the chairman of its board from January 2018 to October 2018. He also was chief executive officer and a director of Visa Inc. from October 2012 to December 2016.

During his tenure at Bank of New York Mellon, Charlie demonstrated a strong track record in initiating and leading change, driving results, strengthening operational risk and compliance, and innovating amid a rapidly evolving digital landscape.

As the CEO of Visa, Charlie transformed the firm into a technology-driven digital commerce company by partnering with the world’s leading technology companies to drive new payment experiences and introduce new technologies to improve payment system security.

Previously, he was a managing director of One Equity Partners at JPMorgan Chase & Co. and chief executive officer of Retail Financial Services at JPMorgan Chase. He also was chief executive officer of the retail division of Bank One Corp., chief financial officer of Bank One Corp., chief financial officer of the Global Corporate and Investment Bank division of Citigroup, and chief financial officer of Salomon Smith Barney and its predecessor company.

Charlie earned a Bachelor of Arts degree from Johns Hopkins University and an MBA from New York University.

He is a director of Microsoft Corporation, serves on the board of trustees of Johns Hopkins University, is a member of The Business Council, and is chairman of the New York City Ballet. He lives in New York City.

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