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Kevin Fromer

President and Chief Executive Officer

Bank supervision is a longstanding practice intended to ensure we have a safe and sound banking system.&nbsp; Experienced bank supervisors can provide informed and focused feedback to banks, supporting banks’ efforts to operate successfully in a dynamic economy.&nbsp; The benefit of appropriate supervision is clear: a safely-run bank delivers for its customers and communities.&nbsp; What if, however, supervision becomes broken, unfocused, and excessive?&nbsp; Like incorrect or excessive medication, there is an increased risk of adverse side effects.&nbsp; In recent years, the signs of those effects have become increasingly clear and pervasive.&nbsp; Bank supervision has strayed from its core objectives, and banks of all sizes are experiencing those side effects.&nbsp; The results are not good, and they ironically may be reducing safety and soundness.&nbsp; Given the critical importance of the banking system to our nation’s shared prosperity and growth, we need to get back to a rigorous but sensible approach to bank supervision and we must not wait.Four broad changes must be vigorously pursued to bring supervision back to its core mission: focus on material risks, respect the boundary between supervision and regulation, provide for effective challenge, and improve efficiency in supervision.&nbsp;&nbsp;<h3>Getting Back to the Core Mission: Restore Focus on What Matters</h3>Fundamentally, the objective of supervision is to ensure that banks operate in a safe and sound manner.&nbsp; Supervisors review the activities of banks and assess whether the firms are complying with laws, a raft of regulation and other guidance.&nbsp; They also assess whether firms are properly managing risks associated with proper funding (e.g., capital and liquidity), operations (e.g., cyber resilience), and financial crime (e.g., money laundering) to name a few.&nbsp; Outsized risks, if poorly managed, can imperil a bank’s safety and soundness.&nbsp; To be effective, bank regulators must focus their resources on those bank practices that have a clear and material bearing on a bank’s financial risks and soundness.The recent failure of Silicon Valley Bank (SVB), and the resulting reports that detail the failures leading up to its collapse, clearly demonstrates the costs of losing supervisory focus.&nbsp; The Federal Reserve’s <a href="https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf">report</a> on SVB details 31 distinct issues that were flagged by supervisors for remediation prior to its failure.&nbsp; Of those 31 issues, a significant majority – 20 out of 31 – fell under the rubric of “Governance and Controls”.&nbsp; Governance and Controls covers a range of largely process-driven issues that, while not irrelevant, do not relate to the core banking function that drives safety and soundness.&nbsp; A review of the SVB report shows that the Governance and Controls issues identified by supervisors included “data governance,” “vendor management,” and “IT asset management.”&nbsp; Unfortunately, only a relatively small share of supervisory findings related to the core capital and liquidity issues that were at the heart of SVB’s collapse.The lesson learned from SVB cannot be overstated, must not be forgotten, and must inform near-term supervisory reform efforts.&nbsp; Bank supervisors do not have limitless resources.&nbsp; The resources stewarded by bank supervisors must be focused on activities and practices that go directly to a bank’s safety and soundness.&nbsp; In his recent Congressional testimony, Chair Powell reflected on the key problem at SVB.&nbsp; In response to a direct question about SVB, he offered that “what happened was, I would say a lot of focus on process and on governance and controls and not enough focus on basic bread and butter banking, credit risk, liquidity, risk, interest rate risk, things like that.”&nbsp; Bank supervision can be significantly improved and made more efficient by heeding these words and re-focusing supervision on what truly matters.Finally, in fixing one mistake and re-focusing supervision on materiality, it is important not to make another, even more costly mistake.&nbsp; Supervisors should not engage in “Monday morning quarterbacking” of bank decisions.&nbsp; Supervisors should ask questions and seek to understand why bank management makes certain, material risk decisions, but a drive to understand should never be allowed to morph into a drive to supplant bank management.&nbsp; It can indeed be tempting for supervisors to inject their own views considering all the context and information that is being provided as part of the supervisory process, but that temptation must be actively avoided.&nbsp; Supervisors are not bankers and are not in the business of providing “consulting advice” to bankers.&nbsp; Rather, bankers and supervisors must respect the relevant expertise and role of the other party as they work together in the supervisory process.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<h3>Stick to Your Knitting: Respecting the Boundaries Between Supervision and Regulation</h3>Bank supervisors have an important job to do; they are charged with the critical task of assessing whether banks comply with existing regulations supporting bank safety and soundness.&nbsp; Bank supervisors are not charged with making new regulations or otherwise adjusting or tweaking existing regulations based on their views of bank practices.&nbsp; Regulatory staff have a different charge: they devote significant time, attention, and resources to the policy formation process. &nbsp;Their work is subject to public review and comment before implementation.&nbsp; For good reason, regulation is a distinct and separate function from the supervision function and their boundaries must be respected.&nbsp; Supervisory findings may, when subject to appropriate public transparency standards, inform the regulatory process, but supervisory judgement should not replace the existing, open, and transparent policy process. &nbsp;Private guidance or other directions by supervisors that results in a de-facto regulatory change runs counter to long-standing, good public policy and risks reducing the effectiveness of supervision.Much of supervision occurs through observation of practices across a set of banks followed by suggestion and comment.&nbsp; Such “horizontal reviews” of bank practices, when well executed, can be a useful input to the supervisory process.&nbsp; At the same time, using the findings of those reviews to require or vigorously “suggest” policy changes in bank practices provides no opportunity for public review and comment and breaches the boundary between supervision and regulation.&nbsp;<h3>Let’s Go to the Replay Center: Providing for Effective and Non-Contentious Challenge&nbsp;</h3>Professional sports have been transformed over the past 25 years by the introduction of video review.&nbsp; The use of video review reflects the fact that referees are human and make mistakes that they cannot self-identify in real-time by dint of the fact that they are… human.The same issue arises in the case of supervision.&nbsp; Often, there are differing views on complex financial and regulatory issues. For example, did he swat the basketball away before or after it reached its maximum height?&nbsp; In such cases, supervisors should be accepting of and even invite effective challenge.&nbsp; An effective challenge of an existing view requires one to rigorously re-evaluate their position and ultimately improves the quality of the viewpoint and any decision tied to it.&nbsp;Moreover, supervisors often simultaneously play the role of “judge, jury, and executioner”.&nbsp; The supervisory agency is responsible for establishing the rules, supervisors judge adherence to those rules, and the supervisory agency will mete out any penalties or other consequences for any violation of those rules.&nbsp; As a result, it is all the more important that supervisors institute and actively encourage the ability of a firm to challenge a supervisory finding.An effective challenge mechanism would allow firms to seek a third-party review of a supervisory finding or interpretation that it believes to be made in error.&nbsp; To be clear, a third party may be a representative of the supervisory agency but should not be anyone that is directly connected to the issue being challenged.&nbsp; Such reviews must be received in good faith by supervisors and must not come with the fear – real or perceived - of reprisal.&nbsp; The challenge mechanism must be predictable and efficient.&nbsp; The process to escalate and resolve a challenge must be clear to all parties, not subject to change on a whim, and should be concluded within a reasonable timeframe so that things don’t linger interminably.&nbsp;<h3>Making the Trains Run on Time: Elevating the Importance of Efficiency in Supervision</h3>Beyond focusing too much on immaterial matters, the case of SVB also demonstrated that a lack of efficiency and overly cumbersome bureaucracy in supervision can have tragic consequences.&nbsp; In the case of SVB, supervisors did identify the key lack of liquidity risk management that ultimately led to its downfall.&nbsp; Tragically, however, supervisors did not act decisively or deliberately to get ahead of the problem before it was too late.&nbsp; Rather, untold rounds of meetings and briefings were held without providing specific and actionable feedback to SVB management.&nbsp; By the time the liquidity risk crystallized, it was too late to address the long festering problem, and the firm collapsed.This incident should serve as a parable to illustrate a broader truth.&nbsp; Efficiency matters.&nbsp; Sitting on the right answer until it is too late is worse than having no answer at all.&nbsp; More broadly, supervision should be designed at the outset to be effective.&nbsp; Effectiveness means providing feedback in a reasonable time frame and then laying out clear, transparent, and actionable steps that can be taken to address the issue.&nbsp;The supervisory process must be designed to be as efficient as possible.&nbsp; As an example, supervisory communication can often be long and drawn out.&nbsp; Supervisors may conduct an exam and then take several months formulating and processing the results before any feedback is provided to firms.&nbsp; Finally, supervisory findings may not come with clear, actionable steps that can be taken to address the identified issue.&nbsp; Rather, supervisory communication may be too “high-level” or “principles-based” to be of much practical use.A move to greater efficiency in supervisory communication would promote a frank and healthy exchange of views.&nbsp; In the vein of “if you see something, say something”, a quick and direct communication shortly following identification of a supervisory issue is likely to elicit an informed and genuine response as the issue will likely still be top of mind for management.&nbsp; Shrouding each and every communication in an overly elaborate, formal and formulaic response deadens the senses and limits the scope for productive engagement.A re-invigoration of the supervisory process with a drive for greater efficiency will improve the quality and quantity of supervision and firm engagement.&nbsp; With clearer and more transparent communication, signposts, and remediation action steps, firms will realize that they have greater agency and will be incentivized to productively and collaboratively contribute to the supervisory process.&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<h3>The Road Ahead: How Do We Get Where We Need to Go?</h3>We have laid out four key supervisory reform areas:<ol><li>Refocus supervision to focus on issues of significant materiality to safety and soundness.</li><li>Respect the boundary between supervision and regulation.</li><li>Provide for effective challenge of supervisory determinations.</li><li>Elevate the importance of efficiency in the supervisory process.</li></ol>Each of these changes is critical to reforming bank supervision.&nbsp; Together, these changes amount to a real cultural shift in supervision.&nbsp; Culture change is both notoriously difficult and spectacularly rewarding when achieved.&nbsp; Manifesting a real culture change will require an “all of the above strategy” that seeks to change both informal, internal processes and executive organization of supervision, as well as changes to the regulatory framework that governs how supervision is conducted.In some cases, new regulations are called for to enact the needed changes.&nbsp; Durable changes to a policy regime require formal changes to the “rules of the road” to establish and publicly signal a permanent shift in thinking and behavior.&nbsp; As an example, establishing an effective challenge system is one example where changes to regulations are likely required.But culture does not change by fiat alone.&nbsp; Put differently, you can’t regulate people into thinking differently.&nbsp; To affect a durable and genuine change in supervisory culture, the internal, and necessarily informal, organization and administration of supervision must change.&nbsp; The organization and number of supervisory committees, standards of practice around supervisory examination and communication, and expectations around how supervisors engage with bankers on a day-to-day basis will most efficiently and effectively be reformed by changing internal processes and procedures that reset the cultural baseline that determines “how supervision is done”.<h3>Getting Started: No Time Like the Present</h3>Effective and efficient supervision is critical to the safety and soundness of our banking system, along with the growth and American competitiveness it supports.&nbsp; Our members are committed to working with supervisors to support a safe and sound banking system that works for everyone.&nbsp; The areas of reform detailed above represent common sense changes that would bring focus and efficiency.&nbsp; They are supported by the collective experience of our members as well as the recent example of Silicon Valley Bank.&nbsp; As the collapse of SVB made clear, the conduct of supervision can have a first order impact on bank safety and soundness. Our expectation is that supervisors will immediately begin the process of implementing reforms that will have a durable and positive impact on the banking system and our economy.&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;

BankNotes Blog

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The Forum advocates for appropriate policy and regulation that promotes a strong, diverse financial system and supports the needs of our economy and American competitiveness.

Regulatory, other topics 

The Urgency of Making Bank Supervision Focused, Efficient, and Supportive of Stability and Growth

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Sean Campbell

Chief Economist, Head of Policy Research

<h3>Introduction</h3>As we navigate the start of 2025, it is a good idea to take stock of the state of large bank capital while also considering what reforms are needed to better align capital standards with economic growth.&nbsp; In this post, we document the significant inflation in large bank capital – in both dollar and percentage terms – since 2018.&nbsp; We close by outlining key capital reforms that are necessary to ensure that large banks can continue to support a robust economy while safeguarding a resilient banking system.&nbsp; Finally, the issues that we discuss below are treated in greater detail in our recent report “<a href="https://fsforum.com/a/media/financial-services-forum,-jan-2025.pdf">Observations and Recommendations for a New Administration and U.S. Economic Growth</a>”, and we refer folks to the report for a deeper dive on these issues.<h3>Large Bank Capital is at All-Time Highs</h3>Figure 1 documents the state of bank capital for Forum members.&nbsp; The chart displays a four-quarter average of Forum member aggregate common equity Tier 1 (CET1) capital – the highest quality form of capital.&nbsp; The chart shows both the dollar value of capital maintained by Forum members as well as the aggregate ratio of capital to risk-weighted assets.<figure class="image image_resized" style="width:76.98%;"><img src="https://fsforum.com/a/media/2.5.25-blog-chart.png"><figcaption>Source: Federal Reserve Y9-C</figcaption></figure>As shown in the chart, Forum members now maintain more than $950 billion in CET1 capital.&nbsp; This level of capital is an all-time high.&nbsp; The same pattern is also evident in percentage terms.&nbsp; The aggregate Forum member capital ratio now stands at over 13 percent, also an all-time high.The robust level of capital maintained by Forum members has been clearly recognized by regulators.&nbsp; As an example, the Federal Reserve recently pointed to the strong level of large bank capital among Forum members (U.S. GSIBs) in its <a href="https://www.federalreserve.gov/publications/files/financial-stability-report-20240419.pdf">Financial Stability Report</a>.&nbsp; Specifically, they noted that “CET1&nbsp;ratios for global systemically important banks (G-SIBs) reached the highest levels recorded in the past decade, while CET1 ratios for large non–G-SIBs and other bank holding companies were close to pre-pandemic levels.”&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<h3>Large Bank Capital Has Been Inflated by Ever-Rising Regulatory Requirements</h3>Considering the all-time high levels of bank capital, it is worth exploring the reason for these capital levels.&nbsp; While Forum members are committed to strong capital levels that support a resilient banking sector and robust economy, they are also subject to the requirements of bank regulators.&nbsp; And, indeed, much of the increase in required capital can be traced to inflated regulatory requirements.&nbsp; In Figure 2 below, we document the change in required capital for Forum members in just the past six years.<figure class="image image_resized" style="width:76.93%;"><img src="https://fsforum.com/a/media/2.5.25-blog-chart-2.png"><figcaption>Source: Federal Reserve Y9-C, FFIEC 101</figcaption></figure>As shown in Figure 2, CET1 requirements have increased from 8.4 percent to 11.2 percent since 2018.&nbsp; Looking further, the chart shows that the rise in requirements is driven by a significant increase in the stress capital buffer, or “SCB,” (1.9 percent to 3.5 percent) that is a result of the Federal Reserve’s stress testing framework as well as a significant increase in the GSIB surcharge (2.0 percent to 3.2 percent).&nbsp; These increases have occurred despite the fact that the risk profile of Forum members has improved.In the case of the GSIB surcharge, the increase is driven largely by an unwarranted inflation in GSIB surcharges stemming from the massive increase in the Federal Reserve’s balance sheet since 2018.&nbsp; As we have discussed <a href="https://fsforum.com/news/raising-the-cost-of-credit-at-the-wrong-time-the-unnecessary-and-counterproductive-rise-in-the-gsib-surcharge">previously</a>, both paradoxically and perversely, the GSIB surcharge for Forum members continues to increase despite the fact that the expansion of the Federal Reserve’s balance sheet increases the supply of safe bank reserves, which lowers systemic risks.In the case of the stress capital buffer, the increase stems from the replacement of a fixed “capital conservation buffer” with a buffer that increases or decreases based on the potential losses simulated in the annual stress test exercise.&nbsp; This new capital requirement was introduced in 2020.Finally, while it is not displayed in Figure 2, no discussion of large bank capital requirements is complete without mentioning risk-blind leverage capital requirements.&nbsp; As we have <a href="https://fsforum.com/news/past-due-notice-addressing-leverage-capital-for-large-banks-to-restore-treasury-market-functioning">previously</a> discussed, the massive inflation of the Federal Reserve’s balance sheet has made leverage capital requirements increasingly binding and has indirectly led to increased capital levels for large banks.&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;In sum, a primary driver of increased capital among large banks has been an inexorable and unnecessary inflation of large bank capital requirements, which are not supported by any consistent, well-established analysis.&nbsp; The only common thread tying together these developments has been the loose claim that “more is better.”&nbsp; Of course, this claim is fundamentally incorrect as it ignores the fact that increasing capital has a real economic cost.&nbsp; Like any economic resource, unchecked increases, at some point, become counterproductive.&nbsp;<h3>Capital Reform in 2025&nbsp;</h3>Forum members are strongly committed to robust capital standards that are transparent, risk-sensitive, and strike the right balance between safety and growth.&nbsp; Unfortunately, the last several years have witnessed a variety of capital-related policies that have moved us further away from an appropriate and efficient bank capital regime that supports the U.S. economy.&nbsp; The following capital policy initiatives should be undertaken in 2025 to reform and improve the large bank capital regime.<ol><li>Any implementation of Basel III Endgame must be consistent with its original intent, coherent with other capital requirements, and mindful of the robust level of capital maintained by large banks.&nbsp; Basel III Endgame was developed as a means of raising capital standards for non-U.S. banks to closely align with U.S. standards and was not intended to materially increase capital.&nbsp; As described above, U.S. large bank capital is at an all-time high and exceeds the level maintained by foreign peers.&nbsp; Any final implementation of Basel III Endgame in the United States must ensure a level playing field with those of non-U.S. jurisdictions and should not result in any increase in capital for large U.S. banks.&nbsp;&nbsp;</li><li>&nbsp;The GSIB Surcharge must be fundamentally reformed.&nbsp; The U.S. version of the GSIB surcharge is significantly more stringent than the international standard applied to foreign GSIBs.&nbsp; In addition, the U.S. version of the GSIB surcharge mechanically increases for reasons that have nothing at all to do with systemic risk and in some cases increases when systemic risk decreases.&nbsp; The U.S. GSIB Surcharge must be rationalized with the international standard and should not be allowed to increase unabated as the size of the economy or the size of the Federal Reserve’s balance sheet increases.</li><li>Leverage capital requirements must be reformed so that they are appropriate for the current size of the Federal Reserve’s balance sheet.&nbsp; It is well documented and understood that current leverage capital requirements are undermining the market for U.S. Treasuries and other low-risk assets.&nbsp; Indeed, the G30 publicly <a href="https://static1.squarespace.com/static/58d527666a4963244b157400/t/6102d10a888ff15114a6e71d/1627574539757/G30_U.S_._Treasury_Markets-_Steps_Toward_Increased_Resilience.pdf">called</a> upon the Federal Reserve to reform leverage requirements for this reason.&nbsp; Back in 2021, the Federal Reserve publicly <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210319a.htm">committed</a> to “soon” reconsider leverage capital requirements, but has not done so.&nbsp; Leverage capital requirements must be reformed so as not to serve as the binding capital constraint and to restore incentives to provide much-needed liquidity to the U.S. Treasury market.</li><li>&nbsp;The stress tests must be reformed to provide transparency and reduce volatility in the annual resetting of the SCB.&nbsp; Recently, the Federal Reserve <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20241223a.htm">announced</a> that it will undertake serious reform of the stress testing regime to improve transparency and reduce unwarranted volatility.&nbsp; We support these efforts and will engage further as they unfold in 2025.</li></ol><h3>Conclusion</h3>Capital levels among Forum members are at an all-time high.&nbsp; Forum members support robust capital standards that support a resilient banking sector and a robust economy.&nbsp; Much of the observed increase in capital over the past several years has been the result of unchecked and inflated regulatory standards that have been allowed to increase without being tethered to any analysis or serious consideration of the appropriate path forward.&nbsp; The reforms described above would improve the effectiveness and efficiency of the large bank capital regime, improve international consistency and competitiveness, and support a strong U.S. economy while maintaining a highly resilient banking system.

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Increases in capital requirements would harm American households, businesses, and the broader economy. Regulators must carefully consider the economic impact of higher capital requirements, because they affect the whole economy, not just banks.

Capital, other topics

Large Bank Capital: There is More to Inflation Than the Price of Goods and Services

This week we learned that bank regulators may re-propose their rule to implement the Basel III Endgame in the United States.&nbsp; The potential changes were outlined in a <a href="https://www.federalreserve.gov/newsevents/speech/barr20240910a.htm">speech</a> by Federal Reserve Vice Chair for Supervision Michael Barr and were the first public explanation of the “broad and material” changes announced by him and Fed Chair Powell earlier in the year.As we await a re-proposal, it is worth considering some initial observations.First, it is important to consider the potential capital impact of 9 percent.&nbsp; In a world in which the largest U.S. banks are demonstrably very highly capitalized and strong, and in which the U.K. has announced its Basel III Endgame will result in an impact of less than 1 percent and the EU stands at 5.6 percent, we still fundamentally question why this proposal raises capital for U.S. banks, and why our policymakers would choose that outcome for the U.S. economy.&nbsp; Basel III Endgame was never intended to increase capital requirements. Given the array of strong prudential safeguards that have been enacted over the past 15 years, it is entirely unclear as to why any measurable increase in large bank capital is needed.&nbsp;Second, the process for reconsidering the proposal is an unusual one.&nbsp; We expect to see revisions that have been agreed by the Fed, the OCC, and the FDIC, but we will not see potential revisions of areas that are still being considered. Commenters will have to determine if their concerns were addressed and to what extent, or completely unaddressed.&nbsp; In addition, the re-proposal likely will be complex and lengthy.Third, the original proposal lacked critical economic analysis, including cost-benefit analysis, that is essential for the public to have and consider.&nbsp; Many decisions in the original proposal lacked justification, and for us, defied explanation.&nbsp; Hopefully, a re-proposal will address these serious shortcomings.The most meaningful changes previewed would alter the imposition of higher capital charges for certain credit exposures, equity exposures, and operational risk.&nbsp; What appears to be largely unaddressed, however, are very significant and higher charges for <a href="https://fsforum.com/a/media/basel-iii-endgame-market-making-requirement-threatens-liquidity,-economy,-and-financial-stability.pdf">exposures</a> associated with trading, market making, and underwriting.&nbsp; These activities are already subject to additional, stringent regulation post-financial crisis, including capital requirements.&nbsp; And they are no less important for the wide range of large companies, mid-market businesses, pensions, state and local governments and other institutions, like universities, which use the services of major banks to access capital, invest, grow and contribute to society. These bank customers serve people and businesses across the country, so not addressing these issues could, as experts have found, increase the costs or reduce the availability of the services they provide.In addition, the re-proposal appears to fall short of providing sensible capital requirements for lending to a wide swath of creditworthy businesses in the United States. The proposal of July 2023 provided a lower capital charge to corporates deemed to be “investment grade” if they are publicly traded (think General Motors), but would apply higher capital charges for companies that are arguably equally credit worthy but privately held (think Chick-fil-A).&nbsp; As we have pointed out, there are a relatively small number of publicly traded companies in the U.S., and many more private ones that would be subject to higher capital charges that are not justified by elevated credit risk.&nbsp; The re-proposal would carve out companies that are “regulated entities” like pensions and mutual funds, but everyone else – essentially non-financial companies – would still be subject to a higher capital treatment.&nbsp; There is no connection between whether a company is high risk or low risk and whether it issues publicly traded securities.&nbsp; If the re-proposal affirms this observation, we believe there will be significant interest in further work on this issue.We look forward to reviewing the re-proposal.&nbsp; It is important we get this right.

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Despite the demonstrated strength of the largest U.S. banks, the Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, on split votes, issued a proposal in July 2023 to increase capital requirements. The proposal offers no reason or justification for material increases in capital requirements and would harm American households, businesses, and the broader economy. 

Given the complexity of the proposal, its many and significant negative impacts, and the lack of evidence in support of its changes, the agencies should repropose the rule and include the motivations, data and analysis that demonstrate the need for proposed changes.

Basel 3 Endgame 

Basel III Endgame: Where Things Stand

Dear reader,Welcome to the latest edition of The Forum File. In this edition, we are highlighting one bank’s work to expand affordable homeownership opportunities for people 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<h2>Penny for Your Thoughts</h2>Abigail Suarez, Head of Community Development, Corporate Responsibility<h3>Describe how JPMorganChase is taking a holistic approach to addressing the housing crisis.</h3>As a firm, we’re committed to expanding economic opportunity and driving inclusive economic growth. When communities thrive, our business does, too. The housing crisis is complex and requires multifaceted solutions, which is why our strategy aims to tackle both housing supply and demand constraints. We are leveraging our philanthropic dollars, business practices, and policy expertise as part of a coordinated, holistic approach to make housing more accessible and affordable. To give a recent example: in an effort to expand homeownership opportunities for underserved communities, we announced a $20 million philanthropic commitment to non-profit organizations working to address this issue, expanded access to a consumer lending product that provides eligible customers with lower interest rates or down payment assistance, and published policy recommendations for <a href="https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/documents/advancing-affordable-sustainable-homeownership.pdf">Advancing Affordable, Sustainable Homeownership</a>. Our combined resources and expertise enable us to deliver impact alongside our local partners.<h3>JPMorganChase recently released a paper on <a href="https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/documents/tackling-persistent-residential-vacancy-blight-and-abandonment.pdf">Tackling Persistent Residential Vacancy, Abandonment, &amp; Disrepair</a>, which outlined place-based strategies to tackle housing supply. How are you implementing these strategies in your own work?</h3>&nbsp;Households across the country are struggling to find affordable places to live, but the solutions to this issue vary depending on the market—in some areas the answer is <a href="https://www.jpmorganchase.com/newsroom/stories/2024-housing-supply-solutions">increasing housing production</a>, while other areas may need strategies to reactivate vacant or abandoned homes as safe places to live. This paper on residential vacancy is part of our What Works series, which shares insights and lessons learned drawn from our experience working with public, private and community partners to drive inclusive economic growth. The paper discusses the importance of&nbsp; building local capacity to address housing affordability challenges, a principle reflected in a $6 million commitment we made in Baltimore to increase affordable homeownership and stabilize housing supply. Our approach is informed by over half a decade of partnership with local city organizations and leaders who are finding innovative approaches to reduce the number of vacant homes in Baltimore. Working in silos is rarely effective, and we’re proud to show up in local communities as listeners and partners to tackle big challenges and catalyze progress.<h3>Another obstacle to homeownership is the problem of heirs property. Why is tackling heirs property important and what is JPMorganChase doing to address it?</h3>Homeownership is a primary means of building and passing wealth across generations—however, the issue of heirs property puts this at risk. Heirs property occurs when a homeowner dies without a will and their property is informally inherited by multiple descendants. Left unaddressed, this unstable homeownership status compromises the ability of residents to pass the property on to descendants and makes them vulnerable to foreclosure or a forced sale. To address this issue, we announced more than $9 million in philanthropic funding to support free legal assistance, estate planning services, and appraisal reform in underserved communities, as well as highlighted support for state and federal policy reforms to address this issue.&nbsp;We also published papers on <a href="https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/documents/supporting-heirs-property-owners-through-natural-disaster-and-resiliency-programs.pdf">Supporting Heirs Property Owners Through Natural Disaster and Resiliency Programs</a> and <a href="https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/documents/addressing-the-undervaluation-of-property.pdf">Solutions to Build Household Wealth by Addressing the Undervaluation of Property</a> to amplify insights and recommendations informed by our business, philanthropic, and policy expertise. By addressing the problem of heirs property, we can help more individuals benefit from the generational wealth-building power of homeownership.<h2>Value Add</h2>JPMorganChase announces plans to expand access to consumer, business and community banking services for customers across Iowa<figure class="image image_resized" style="width:82.6%;"><img src="https://fsforum.com/a/media/chase-heartland.png"></figure>JPMorganChase has committed to open more than <a href="https://media.chase.com/news/chase-makes-multi-billion-dollar-investment-in-its-branch-network">500 new branches, renovate approximately 1,700 locations and hire 3,500 employees across the country over the next three years</a>. This multi-billion dollar commitment will contribute to local economic growth through construction, ongoing community investments and local hiring, bringing opportunity to thousands of local residents.&nbsp;<a href="https://www.cnbc.com/2024/08/05/jpmorgan-chase-opens-more-small-town-branches-in-middle-america.html">As part of this nationwide expansion</a>, CEO Jamie Dimon, senior leaders from across the firm, community partners, employees and elected officials came together in Des Moines to announce the <a href="https://www.jpmorganchase.com/newsroom/press-releases/2024/jpmorganchase-expands-banking-services-in-iowa">expansion of the firm’s services to customers and communities across Iowa</a>. The firm’s Iowa footprint will expand from eight branches to more than 30 across the state by 2030, including new branches in Des Moines, Waterloo, Cedar Rapids, Sioux City, Iowa City and Ames. This commitment&nbsp;is part of the firm’s broader goal to serve 50% of the population in each of the 48 contiguous states within an accessible drive time and builds on 39 years of support for clients and communities in Iowa.<h2>Capital Gains</h2>What we’re doing in WashingtonForum President and CEO Kevin Fromer <a href="https://fsforum.com/news/forum-comments-on-reconsideration-of-capital-regulations">issued</a> a statement following Federal Reserve Vice Chair for Supervision Michael Barr’s remarks on U.S. capital regulations. “We look forward to reviewing the revisions and participating fully in the public comment process. Getting this right is essential for the U.S. economy,” Fromer said.<h2>Our Two Cents</h2>Research from the ForumThe BankNotes Blog Spotlighted:<ul><li>A report from the Government Accountability Office on the banking agencies’ regulatory analysis, which <a href="https://fsforum.com/news/playing-catch-up-on-cost-benefit-analysis-regulators-need-to-up-their-game-on-basel-iii-endgame">emphasizes</a> significant implications for finalizing the Basel III Endgame capital proposal.</li><li>The strong liquidity profile of Forum members and the need for thoughtful and data-based analysis before <a href="https://fsforum.com/news/getting-it-right-before-getting-it-done-large-bank-liquidity-regulation">proposing</a> new liquidity regulations for large banks.</li><li>A proposal by the Federal Reserve and global regulators through the Basel Committee on Banking Supervision to <a href="https://fsforum.com/news/gsib-scores-and-window-dressing-where-is-the-smoking-gun">increase</a> the cost and burden of GSIB score reporting, which is not supported by regulatory data on both GSIBs and non-GSIBs.</li></ul><h2>Checking the Balance</h2>Members in the NewsBank of America <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2024/07/bofa-celebrates-20-years-of-paid-summer-internship-program---stu.html">celebrated</a> two decades of supporting youth employment and economic opportunity through its signature philanthropic program, Student Leaders. The program has provided 4,500 students with work experience and leadership skills to help build future careers.BNY <a href="https://urldefense.com/v3/__https:/america250.org/news/america250-announces-first-ever-americas-field-trip-awardees/__;!!OiWDNh-9Pw!9ZfEqv9afxrLbGkEk59IdvjAw0JIn1F--1LTM1BDv5vMT2GbGhkwUt2qHWx4cskmLbNY2vmSRZo1KTU$">sponsored</a> America250’s “America’s Field Trip,” a nationwide scholastic contest encouraging students to reflect on what America means to them. The firm helped bring 75 students from 27 states and territories to the nation’s most historical and cultural landmarks including the New York Headquarters of BNY, the country’s oldest bank.Citi’s latest Securities Services Evolution whitepaper focuses on the next frontier for the industry with the growing applicability of technologies, including distributed ledger technology and digital assets, and the significant potential for tokenization. <a href="https://www.linkedin.com/posts/citi_securities-services-evolution-2024-disruption-activity-7236977206336401409-rIAX">Watch an explainer video</a> and read more on these developments that continue to transform the securities landscape <a href="https://www.citibank.com/icg/docs/Citi_Securities_Services_Evolution_2024.pdf?linkId=575991464">in the whitepaper</a>.Goldman Sachs 10,000 Small Businesses <a href="https://urldefense.com/v3/__https:/www.al.com/news/birmingham/2024/09/goldman-sachs-commits-3-million-to-boost-alabamas-small-rural-businesses.html__;!!O2kDR7mm-zSJ!tPfgEVHyVMku67u8Cx4uOF0ywOCofLR2DfFmxS2BzokhfvFOYXgNQH4C-BAS6r0xi7_JESNJCLAQFBSj$">announced</a> an expansion of the program to Alabama, which includes a $3 million commitment to community development financial institutions focused on small businesses, and marks the initiatives fifth launch state to date – on track to meet its goal of reaching 20 states in five years.JPMorganChase <a href="https://www.jpmorganchase.com/newsroom/press-releases/2024/jpmorganchase-unidos-philanthropic-commitment">announced</a> joint policy recommendations and a $6 million commitment to UnidosUS focused on building organization capacity and supporting homebuyer readiness, expanded access to credit, increased housing supply, and the preservation of Latino homeownership.Morgan Stanley celebrated the 2024 graduates of its <a href="https://www.morganstanley.com/about-us/supplier-diversity/small-business-academy1">Small Business Academy</a>, a partnership between its Supplier Diversity Program and the Institute for Inclusion. Through 12 weeks of instructor-facilitated learning and a year-long mentorship program, the Academy enables small businesses to differentiate themselves in the procurement process, strengthen their business acumen and expand their professional networks.State Street <a href="https://newsroom.statestreet.com/press-releases/press-release-details/2024/State-Street-Announces-Issuance-of-1-Billion-of-Senior-Debt/default.aspx">announced</a> an issuance of $1 billion of senior debt, which includes five broker-dealers owned by underrepresented groups who have underwritten 40% of the securities in the issuance.Wells Fargo <a href="https://stories.wf.com/wp-content/uploads/2024/07/Open-for-Business-Fund-Impact-Report-Fact-Sheet.pdf">shared</a> its recent community impact report of the company’s Open for Business Fund, a roughly $420 million national small business recovery effort to help those hardest hit during and after the COVID-19 pandemic. Launched in 2020, grantees report the Open for Business Fund has now benefited more than 336,000 small businesses, empowering them to keep or create more than 461,000 jobs in communities across the nation.

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The Forum File, 2024 Edition #5

Dear reader,Welcome to the latest edition of The Forum File. In this edition, we are highlighting one bank’s work to support underrepresented entrepreneurs.We hope you enjoy reading this edition and please do not hesitate to share your feedback.Kevin Fromer, President and CEO, Financial Services Forum<h2>Penny for Your Thoughts&nbsp;</h2>Selma Bueno is the Global Head of Morgan Stanley’s Inclusive Ventures Group<h3>Tell us about the Morgan Stanley Inclusive Ventures Lab and what makes it unique.</h3>The <a href="https://www.morganstanley.com/about-us/diversity/inclusive-ventures-lab">Morgan Stanley Inclusive Ventures Lab</a> was launched in 2017 to advance a more equitable investment landscape. We run a five-month accelerator program for founders of technology and technology-enabled startups in the seed to Series A funding round stage to develop and scale their businesses. In 2021, we expanded the Lab from North America to Europe, the Middle East and Africa, enabling us to support even more innovation and inclusion globally.&nbsp;What makes our program unique is its holistic approach to supporting portfolio companies. We invest $250,000 in each business, as well as provide a tailored curriculum, mentorship, networking, office space for the duration of the program and access to external advisors.To date, 92 companies, with a combined valuation of $923 million, have been through our accelerator program. The founders have collectively raised over $200 million in additional funding since their participation in the Lab.<h3>How does the Lab’s work align with Morgan Stanley’s Core Values?</h3>At Morgan Stanley, we are guided by five Core Values: do the right thing; put clients first; lead with exceptional ideas; commit to diversity and inclusion; and give back. I am proud to lead an initiative that integrates each of our values.The Lab was created to help shift the investment landscape and level the playing field for underrepresented entrepreneurs because it is the right thing to do, both for the founders we support and for the marketplace as a whole. By spotlighting innovative companies and giving them the platform and network they might need help accessing, we are driving innovation in business broadly.Our Lab’s cohort companies receive the full suite of Morgan Stanley resources and an ecosystem of internal and external partners to provide much-needed investment and guidance – as any client would. In connecting the founders with mentors and with one another, we are building a community in which previously overlooked entrepreneurs can succeed.<h3>Can you tell us how some of the Lab companies are driving inclusivity in the marketplace themselves?</h3>Many of our founders are leveraging their diverse backgrounds and communities’ values to address important gaps in the market and, in turn, advance a more equitable society.Some companies are working to tackle the critical issue of inequity in healthcare, like <a href="https://healthinherhue.com/">Health in Her HUE</a>, which connects Black women and women of color to culturally sensitive healthcare providers and <a href="https://www.gomedhaul.com/">MedHaul</a>, an online marketplace for healthcare providers to book non-emergency medical transportation for patients, based on their special needs.In the education tech space, <a href="https://imagilabs.com/">imagi</a> is using proprietary, inclusive education tools to empower kids to code, increase engagement among girls and help close the gender gap in tech early on.And <a href="https://www.zirtue.com/">Zirtue</a>, a relationship-based lending app that simplifies loans between friends and family, is making it easier than ever for people to access funds by tapping into the power of community support.What all of our cohort companies have in common, regardless of industry or product offering, is the founders’ innate desire to build a better world.&nbsp;<h2>Value Add</h2><figure class="image"><img src="https://fsforum.com/a/media/ivl-founders_crop-(002).jpg"></figure>The Inclusive Ventures Lab Demo Day is our annual showcase where founders can put all they have learned in the accelerator program to the test and raise their profiles with potential investors, business partners and customers.We hosted our ninth Demo Day in February for our largest audience yet of portfolio companies and potential investors. The investment firms in attendance represented over $40 billion of dry powder and indicated a high level of interest in the startups following the event.This latest showcase emphasized both market connectivity, with AI and sustainable solutions as cross-cutting themes, and the sheer range of innovation in our Lab, with companies representing industries such as healthcare, customer service, supply chain, recruiting and cybersecurity.In today’s challenging funding environment, it is incredibly important that we can provide our participating founders with the opportunity to attract capital, expand their networks and bring their game-changing products to scale.<h2>Capital Gains</h2>What we’re doing in Washington<figure class="image image_resized" style="width:79.95%;"><img src="https://fsforum.com/a/media/picture9.jpg"></figure>Forum Chief Economist Sean Campbell <a href="https://fsforum.com/news/icymi-transparency-in-stress-testing-essential-to-achieving-a-more-effective-efficient-and-resilient-financial-system">testified</a> before the House Financial Institutions and Monetary Policy Subcommittee on the need for greater transparency in the stress testing process. “Aligning stress tests with the public process afforded other bank regulatory standards would help improve public trust, promote economic stability, and ensure banks can support the economy to their fullest potential,” Dr. Campbell told lawmakers. Read Dr. Campbell’s full testimony <a href="https://fsforum.com/a/media/forum-dr.-sean-campbell-testifies-on-stress-testing_6.26.24.pdf">here</a> and learn more about stress testing <a href="https://fsforum.com/a/media/stress-testing-for-the-largest-us-banks.pdf">here</a>.&nbsp;Forum President and CEO Kevin Fromer <a href="https://fsforum.com/news/stress-tests-underscore-capital-strength-of-nation-s-largest-banks">issued</a> a statement in response to the Federal Reserve Board’s 2024 stress test results. “The results affirm that the additional capital requirements in the Basel III Endgame proposal are not justified,” Fromer said.The Forum <a href="https://fsforum.com/news/basel-changes-to-capital-surcharge-calculation-unwarranted">submitted</a> a comment letter on the proposed revisions to the methodology for capital surcharges for Global Systemically Important Banks to the Basel Committee on Banking Supervision. “Financial regulations that are not appropriately calibrated result in an inefficient financial system that misallocates capital in a way that can have a detrimental effect on the businesses and households that our member institutions serve, and on the U.S. and global economies as a whole, with no clear corresponding benefit to the resilience of the financial system,” the Forum said.<h2>Our Two Cents&nbsp;</h2>Research from the ForumThe Forum <a href="https://fsforum.com/a/media/forum-value-and-resiliency2024_q1.pdf">released</a> its latest data on the value and strength of the nation’s largest banks.<h2>Checking the Balance</h2>Members in the NewsThe Bank of America Boston Marathon Official Charity Program <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2024/05/128th-boston-marathon--presented-by-bank-of-america-raises-recor.html">raised</a> $45.7 million, contributing to the marathon’s record total of $71.9 million in charitable funds raised this year. The funds went toward nearly 160 non-profit organizations in the Greater Boston community.BNY <a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fwww.bnymellon.com%2fus%2fen%2fabout-us%2fnewsroom%2fcompany-news%2fthe-bank-of-new-york-mellon-corporation-introduces-updated-brand-bny.html&amp;c=E,1,klT35NUTsdUE8BdfT4UgWK1NuEOweXGzypcGVvsnG3INnu37FDoIoScI-Qc2tEiUAfOJodmwKYFxO1EsM5Re-Xc9fYsphx-mJKI0KwjsK55IQDvc&amp;typo=1">introduced</a> its new brand name and logo. The updated brand marks the firm’s evolution from America’s oldest bank, formerly known as BNY Mellon, to a global financial services leader.Citi Global Perspectives and Solutions <a href="https://www.citigroup.com/global/insights/citigps/ai-in-finance">published</a> a new report on AI &amp; Finance: Bot, Bank &amp; Beyond. The report analyzes the role that artificial intelligence might play in changing the way both consumers and companies bank.Goldman Sachs <a href="https://www.goldmansachs.com/our-firm/history/ipo-anniversary/index.html">commemorated</a> the 25th anniversary of its initial public offering. The firm’s leaders from past and present convened to ring the bell at the New York Stock Exchange.JPMorgan Chase <a href="https://www.jpmorganchase.com/newsroom/press-releases/2024/baltimore-philanthropic-commitment">announced</a> an $8.45 million philanthropic commitment to nonprofit organizations and programs across the city of Baltimore to support economic and community development. The funding addresses residential vacancies to stabilize the affordable housing supply, supports commercial corridor revitalization, and promotes small business growth.Morgan Stanley Foundation <a href="https://www.morganstanley.com/press-releases/morgan-stanley-foundation-8-million-grant-to-feeding-america#:~:text=Morgan%20Stanley%20(NYSE%3A%20MS),among%20children%20and%20underserved%20populations.">announced</a> an $8 million grant over four years to Feeding America to support the establishment or expansion of child and family feeding programs. Since 2009, Morgan Stanley’s funding for Feeding America has totaled more than $50 million, helping to deliver more than 356 million meals to children and families.State Street <a href="https://www.statestreet.com/us/en/asset-owner/insights/2024-markets-and-financing-research-retreat">hosted</a> its 2024 Markets and Financing Research Retreat. In collaboration with academic partners, guest speakers and strategists, the event dissected market trends, inflation, and other proprietary data-driven indicators.Wells Fargo Foundation <a href="https://newsroom.wf.com/English/news-releases/news-release-details/2024/100-Black-Men-of-America-and-Wells-Fargo-Expand-Junior-Investment-Club-with-600000-Grant/default.aspx">granted</a> $600,000 to 100 Black Men of America, a youth mentorship organization. This grant helps expand the organization’s Junior Investment Club, a curriculum-based simulation game that introduces young people to investing.

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The Forum File, 2024 Edition #4 

Dear reader,Welcome to the latest edition of The Forum File. In this edition, we are highlighting one bank’s work to help close the racial wealth gap and increase economic mobility for communities of color across the nation.We hope you enjoy reading this edition and please do not hesitate to share your feedback.Kevin Fromer, President and CEO, Financial Services Forum<h2>Penny for Your Thoughts</h2>Harold Butler is the head of Citi’s Diverse Financial Institutions Group<h3>Why did Citi set up a specific group to lead its work with diverse financial institutions?</h3>At Citi, our mission is to enable economic growth and progress. One of the most meaningful ways we are bringing this mission to life is through our commitment to help close the racial wealth gap and increase economic mobility for communities of color in the U.S.I have the privilege of leading Citi’s Diverse Financial Institutions Group – also known as DFIG – which helps institutionalize our company’s commitment to racial equity and serves as a centralized hub to lead and expand our engagement with diverse financial institutions.We know that diverse financial institutions are central to the financial services ecosystem. They are the trusted source of banking and access to capital for many communities across the country. At Citi, we are committed to supporting and strengthening these organizations to help scale this work.<h3>How does DFIG fit into Citi’s approach to using business integration to help address the racial wealth gap?</h3>We know from <a href="https://www.citigroup.com/global/insights/citigps/closing-the-racial-wealth-gap">our own research</a> that the mission of closing the racial wealth gap also presents great economic opportunity both for our country and for firms like Citi that lean into the upside. But we also knew making progress would require us to be intentional about our efforts and make a shift from a short-term, time-bound commitment to a longer-term outlook.By integrating DFIG into Citi’s Markets business, we are enabling Minority Depository Institutions (MDIs) and diverse broker-dealers to get involved in transactions that will grow fee and interest income for these firms. DFIG connects them with the right people at Citi who can make introductions and open up the chance for these firms to play a role in certain capital markets transactions where they might not typically have access or exposure. Citi’s DFIG is unique among Wall Street firms in playing this type of role.<h3>What brought you personally to this work?</h3>I didn’t cut my teeth as a banker. I worked on the sales side in technology at Freddie Mac and Microsoft before transitioning to banking. A professional connection brought me to Citi and I’m a big believer in building a business or a career through relationships with trusted professionals.I got into the DFIG work because we were trying to help one of Citi’s largest clients meet a goal it had related to inclusion for its suppliers. I saw a chance to leverage some of the relationships I cultivated over time to help our client achieve its goals. This helped to fuel what is now DFIG.<h3>How has this work progressed over the last couple of years since Citi originally launched DFIG in 2022?</h3>I know that the day-to-day engagements in Citi DFIG are contributing to closing the racial wealth gap. It is obviously going to take time, but we can feel things are changing. The 13 MDIs that Citi is supporting through equity investments are now positioned better than they’ve been in 40 years. That’s saying something.We’ve learned a lot over the past few years about the challenges many underserved communities are facing. That information empowers us to think about how we do business differently. Banks are the heartbeat of communities. Much like the heart pumps blood to the different parts of the body, investments in communities act much the same way and banks are the catalyst for making that happen.<h2>Value Add</h2>Citi Convenes Executives and Policymakers for DFIG Summit<figure class="image image_resized" style="width:100%;"><img src="https://fsforum.com/a/media/jane-and-steve-benjaminv2.jpg"></figure>The second annual Citi DFIG Executive Summit brought together leaders from more than 80 MDIs and diverse broker dealers and asset managers at the Landsdowne Resort in Leesburg, Virginia, in early May. After launching the summit last year at Citi’s headquarters in New York, the second edition held closer to the nation’s capital enabled several policymakers to participate and share their perspectives on the government’s role in advancing this work.Citi CFO Mark Mason kicked off the conversation in a fireside chat with U.S. Treasury Deputy Secretary Wally Adeyemo while Citi CEO Jane Fraser and Steve Benjamin, Senior Advisor to the President and Director of the White House Office of Public Engagement, spoke to attendees over lunch. Finally, U.S. Deputy Commerce Secretary Don Graves sat down with Jarryd Anderson, co-chair of the Financial Services Group at Paul, Weiss, to talk about the public-private partnership to advance economic growth.Participants also heard from Citi leaders and other outside experts on industry trends, training platforms and innovative solutions to common challenges. Breakout sessions tailored to participant interests and social components of the programming fostered the networking and collaboration that are pillars of the DFIG approach.This annual gathering serves to further drive Citi DFIG’s mission of working with our partners to create revenue-generating opportunities, share expertise, and drive an even greater impact in diverse communities.<h2>Capital Gains</h2>What we’re doing in WashingtonIn our latest BankNotes Blog, Forum Chief Economist and Head of Policy Research, Sean Campbell, <a href="https://fsforum.com/news/federal-reserve-financial-stability-report-underscores-strength-of-america-s-largest-banks-and-wayward-regulatory-policy">examined</a> how the Federal Reserve’s Financial Stability Report underscores the strength of the nation’s largest banks through their strong levels of capital and liquidity. “The Federal Reserve and other regulators should take stock of its own financial stability assessment as they chart the course for regulatory reform,” Campbell wrote.The Forum <a href="https://fsforum.com/a/media/fsf_factsheet_impact-on-muni-bonds.pdf">released</a> a fact sheet on Basel III Endgame’s impact on municipal bonds.<h2>Our Two Cents</h2>Research from the ForumThe Forum <a href="https://fsforum.com/a/media/forum-value-and-resiliency_2023q4.pdf">released</a> its latest data on the value and strength of the nation’s largest banks.<h3>Checking the Balance</h3>Members in the newsBank of America <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2024/03/new-bofa-platform-connects-small-businesses-to-cdfi-capital-and-.html">launched</a> a new Access to Capital Connector, an online platform designed to connect entrepreneurs and small business owners to local Community Development Financial Institutions and other business support organizations.BNY Mellon <a href="https://www.bnymellon.com/us/en/about-us/newsroom/press-release/bny-mellon-collaborates-with-accenture-to-drive-accelerated-growth-for-clients-130384.html">collaborated</a> with Accenture, a leading professional services company, to modernize financial services offerings and help their joint clients drive growth.Citi CEO Jane Fraser <a href="https://www.cnbc.com/2024/05/07/biden-set-to-meet-with-executives-from-citi-united-airlines-others.html">joined</a> other business executives in a White House meeting with President Biden to discuss the economy with a focus on supporting businesses and workers.Goldman Sachs <a href="https://www.goldmansachs.com/media-relations/press-releases/2024/fourth-annual-market-madness-competition.html">held</a> its fourth-annual Market Madness competition, a program dedicated to supporting students at Historically Black Colleges and Universities and granted $1 million to Spelman College.JPMorgan Chase <a href="https://www.jpmorganchase.com/news-stories/20million-housing-affordability-commitment">announced</a> $20 million in new philanthropic funding to eight organizations across the U.S. working to expand homeownership opportunities for underserved communities. Additionally, the firm is expanding its Chase Home Lending program, increasing the homebuyer grant from $5,000 to $7,500 in 8,500 neighborhoods across the U.S.Morgan Stanley <a href="https://www.morganstanley.com/press-releases/morgan-stanley-strengthens-alliance-for-children-s-mental-health">announced</a> a $20 million commitment over the next five years to its Alliance for Children’s Mental Health, bringing the firm’s total funding to $50 million since launch in 2020. The Alliance will strengthen its work delivering programming and research, as well as advancing solutions through its Innovation Awards.State Street <a href="https://newsroom.statestreet.com/press-releases/press-release-details/2024/State-Street-Earns-MLTs-Hispanic-Equity-at-Work-Bronze-Certification-and-Black-Equity-at-Work-Bronze-Recertification/default.aspx">earned</a> the Hispanic Equity at Work Bronze Certification and the renewal of its Black Equity at Work Bronze Certification by Management Leadership of Tomorrow, a non-profit dedicated to advancing racial equity in the workplace.Wells Fargo Home Lending <a href="https://newsroom.wf.com/English/news-releases/news-release-details/2024/Wells-Fargo-Expands-Down-Payment-Grant-Program-to-Help-Bridge-Homeownership-Gap/default.aspx">expanded</a> its $10,000 Homebuyer Access grant program to additional communities in the eight metropolitan areas where the program was launched in 2023. This expansion provides greater opportunities for Black and Hispanic homebuyers and helps increase homeownership for underserved communities.&nbsp;

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The Forum File, 2024 Edition #3

The Forum File

Financial Institutions Support Administration’s Effort to Maintain U.S. Leadership in Digital AssetsWashington, D.C. — Leading financial services trade associations <a href="https://bpi.com/wp-content/uploads/2025/02/Digital-Assets-Letter-to-PWG-on-Digital-Assets-2-20-25vfinal.pdf">voiced strong support today</a> for the goals of the President’s Working Group on Digital Asset Markets. The organizations include the Bank Policy Institute, American Bankers Association, Americas Focus Committee of the Association of Global Custodians, Financial Services Forum, Securities Industry and Financial Markets Association and The Clearing House Association. In a joint letter, the Associations propose recommendations to bolster U.S. leadership in digital assets by removing obstacles to bank engagement with digital asset activities.“We strongly support the President’s goals for the PWG, and we stand ready to assist you as you proceed with the work plan outlined by the President in his January 23rd Executive Order,” the Associations wrote. “The federal banking agencies’ policies and guidance issued over the last few years regarding digital assets activities have hindered banks’ ability to engage in those activities, and, in turn, the competitiveness of the United States financial system, as non-U.S. firms are not subject to similar requirements. Simply put, the United States will not be able to achieve a leadership position in digital assets and financial technology under the status quo.”The recommendations call for several policy statements and guidance documents issued by the federal banking agencies to be rescinded or substantially revised. These policies restrain banks’ ability to engage in virtually any digital asset-related activity, including offering custody and safekeeping services for digital assets, facilitating customer purchases and sales of crypto-assets, holding crypto-assets on their balance sheets or leveraging public blockchains.The letter also encourages the Working Group to include the prudential banking agencies — the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency — in its ongoing work. Involvement by the banking agencies would help ensure that banks can participate in digital asset activities and, thereby, advance U.S. leadership in the digital assets ecosystem in furtherance of the goal of the Executive Order.Policies and guidance identified that should be rescinded or substantially revised include:<ul><li>Federal Reserve<ul><li>SR 22-6, “Engagement in Crypto-Asset-Related Activities by Federal Reserve Supervised Banks”</li><li>Policy Statement on Section 9(13) of the Federal Reserve Act</li><li>SR 23-7, “Creation of a Novel Activities Supervision Program”</li><li>SR 23-8, “Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens”</li></ul></li><li>OCC<ul><li>Interpretive Letter #1179, “Chief Counsel’s Interpretation Clarifying: (1) Authority of a Bank to Engage in Certain Cryptocurrency Activities; and (2) Authority of the OCC to Charter a National Trust Bank”</li></ul></li><li>FDIC<ul><li>FIL-16-2022, “Notification of Engaging in Crypto-Related Activities”</li></ul></li><li>Joint, Federal Reserve, OCC and FDIC<ul><li>Joint Statement on Crypto-Asset Risks to Banks</li><li>Joint Statement on Liquidity Risks to Banks Resulting from Crypto-Asset Market Vulnerabilities</li></ul></li></ul>To access a copy of the letter, please <a href="https://bpi.com/wp-content/uploads/2025/02/Digital-Assets-Letter-to-PWG-on-Digital-Assets-2-20-25vfinal.pdf">click here</a>.Media Contacts: Austin Anton Bank Policy Institute <a href="mailto:austin.anton@bpi.com">austin.anton@bpi.com</a> &nbsp; Sarah Grano American Bankers Association <a href="mailto:sgrano@aba.com">sgrano@aba.com</a> &nbsp; Walter Palmer Americas Focus Committee of the Association of Global Custodians <a href="mailto:walter.palmer@us.bnpparibas.com">walter.palmer@us.bnpparibas.com</a> &nbsp; Laura Peavey Financial Services Forum <a href="mailto:lpeavey@fsforum.com">lpeavey@fsforum.com</a> &nbsp; Katrina Cavalli Securities Industry and Financial Markets Association <a href="mailto:kcavalli@sifma.org">kcavalli@sifma.org</a> &nbsp; Greg MacSweeney The Clearing House Association <a href="mailto:gregory.macsweeney@theclearinghouse.org">gregory.macsweeney@theclearinghouse.org</a><h4>About Bank Policy Institute</h4>The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud and other information security issues.<h4>About American Bankers Association</h4>The American Bankers Association is the voice of the nation’s $24.2 trillion banking industry, which is composed of small, regional and large banks that together employ approximately 2.1 million people, safeguard $19.1 trillion in deposits and extend $12.6 trillion in loans.<h4>About Americas Focus Committee of the Association of Global Custodians</h4>Established in 1996, the Association of Global Custodians is a group of 12 financial institutions that provide securities safekeeping services and asset-servicing functions to primarily institutional cross-border investors worldwide. As a non-partisan advocacy organization, the Association represents members’ common interests on regulatory and market structure matters through comment letters, white papers and interaction with legislative and regulatory authorities and financial industry organizations. The member banks are competitors, and the Association does not involve itself in member commercial activities or take positions concerning how members should conduct their custody and related businesses. The Americas Focus Committee operates as an overarching full committee to address all Association matters involving regulatory/market structure issues arising in North or Latin America.<h4>About Financial Services Forum</h4>The Financial Services Forum is an economic policy and advocacy organization whose members are the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve&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.<h4>About Securities Industry and Financial Markets Association</h4>SIFMA 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.&nbsp; SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).<h4>About The Clearing House Association</h4>The Clearing House Association L.L.C., the country’s oldest banking trade association, is a nonpartisan organization that provides informed advocacy and thought leadership on critical payments-related issues. Its sister company, The Clearing House Payments Company L.L.C., owns and operates core payments system infrastructure in the United States, clearing and settling more than $2 trillion each business day.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Press Releases

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The Forum supports the development of international standards that utilize the existing framework for banking assets when considering how to treat crypto assets for capital, liquidity and other regulations.

Digital Assets

Financial Institutions Support Administration’s Effort to Maintain U.S. Leadership in Digital Assets

CONTACT: Laura Peavey(202) 457-8770lpeavey@fsforum.com“We Have to Have Institutions of this Scale and Diversification to Serve the United States’ Economy”Financial Services Forum CEO highlights nation’s leading banks’ role in the U.S. economy, opportunities for regulatory improvements to support growthWashington, D.C. – Financial Services Forum President and CEO Kevin Fromer joined “<a href="https://open.spotify.com/episode/6PWSWPUYXSI4J3yHAO4vJZ">Macrocast</a>,” hosted by Ed Hill, John Fagan and Brendan Walsh, to discuss the strength of America’s leading banks and their essential role in driving U.S. economic growth. Fromer also highlighted necessary financial regulatory reforms that would allow Forum members to provide even greater support to consumers, businesses, and communities across the country.<figure class="image image_resized" style="width:75%;"><img src="https://fsforum.com/a/media/macrocast_quote-1_scale.png"></figure><a href="https://open.spotify.com/episode/6PWSWPUYXSI4J3yHAO4vJZ">(Click Here to Listen to Interview)</a>Read highlights from the interview:On the Strength and Stability of the Nation’s Leading Banks:“The Forum represents the eight U.S. institutions known as Global Systemically Important Banks, or GSIBs. They hold $4.8 trillion in loans, they account for about three-quarters of activity in our capital markets, they’re leaders in asset management and asset administration, settlement, and a variety of other critical services.“They are the most stringently regulated and supervised institutions, and as a consequence of all of that, they are the strongest and safest financial institutions in the world. And their focus, obviously, is on their customers and their clients, millions of them, they’re focused on working for America and supporting our $30 trillion economy.“We have to have institutions of this scale and diversification to serve the United States’ economy.”On Financial Regulatory Reforms to Unleash U.S. Economic Growth:“Well clearly the Administration is going to focus on a number of initiatives that are intended to have positive macroeconomic effects and promote the strength of the U.S. economy. The financial services industry, and the banks in particular, are conduits of so much of that economic activity.“We still predominantly operate under a very rigid and extensive set of capital requirements, liquidity requirements, requirements to maintain long-term debt issuances ... And we’re coming out of a year in which we were kind of debating the last chapter of the post-crisis capital reforms, called Basel III Endgame, that project was not completed and so that’s still ahead of us.On Expectations and Priorities for the Upcoming Fed Chair Powell Hearings:“We have a host of rules, some of which have been proposed for adjustment, Basel being one of them, the GSIB surcharge is another one, the leverage ratio, which is proving to be, and has been, and will continue to be a source of friction in terms of liquidity in the treasury markets…“So, I think some of the specific parts of the capital framework are issues that we hope Members of Congress will speak to next week with Chair Powell. And then in that broader context, having some assurance that the system is operating the way he thinks it should. For quite some time he has referred to the banking system, and the capital in the banking system, as about right…”Please see the Forum’s “<a href="https://fsforum.com/a/media/financial-services-forum,-jan-2025.pdf">Observations and Recommendations for a New Administration and U.S. Economic Growth</a>,” which further highlights the strength of America’s leading banks and the need for financial regulatory improvements.###&nbsp;The Financial Services Forum is an economic policy and advocacy organization whose members are the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve&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. 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;

“We Have to Have Institutions of this Scale and Diversification to Serve the United States’ Economy”

CONTACT:&nbsp;Barbara Hagenbaugh(202) 457-8783bhagenbaugh@fsforum.comFinancial Services Forum Statement on 2025 Stress Test Scenarios&nbsp;“The nation’s largest banks are strong, well-capitalized, and play a crucial role in the economy.”Washington, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today after the Federal Reserve released the scenarios for its annual bank stress tests:“The nation’s largest banks are strong, well-capitalized, and play a crucial role in supporting American households and businesses, even amidst significant economic challenges. Various hypothetical stress tests, along with the real-life stress tests of the pandemic and the 2023 banking turmoil, demonstrated that the largest U.S. banks can and do serve as a stronghold for the economy and the financial sector.“Forum members have more than tripled their capital levels over the past 15 years. The stress test scenarios released today reflect a continuation of the highly rigorous standards applied to the largest banks since 2009.“We appreciate the Federal Reserve's reaffirmation today that it will take steps to establish the same transparency and public accountability in the stress tests that are provided for all other capital requirements.&nbsp;These and other changes would decrease volatility and foster the ability of consumers and businesses to borrow and engage in other banking activities, supporting the economy.”Please review related&nbsp;<a href="https://fsforum.com/issues/issue-stress-tests">content</a> from the Forum on stress testing.###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, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system. Visit our website: <a href="http://www.fsforum.com/">fsforum.com</a>Follow us on X <a href="https://twitter.com/fsforum">@fsforum</a> and <a href="https://www.linkedin.com/company/financial-services-forum/">LinkedIn</a>

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Each year, the Federal Reserve tests the ability of large banks to continue to support the economy even in the face of a severe recession far worse than that experienced during the financial crisis.

Multiple hypothetical stress tests, as well as the real-life stress tests of the pandemic and the 2023 regional banking turmoil, have shown that the largest U.S. banks can – and do – act as a bulwark for the economy and the financial sector.

Stress Tests

Financial Services Forum Statement on 2025 Stress Test Scenarios

This op-ed was featured in <a href="https://www.americanbanker.com/opinion/basel-myths-are-all-too-real-for-the-financial-services-industry">American Banker</a>.&nbsp;To the editor,In a recent BankThink ("<a href="https://www.americanbanker.com/opinion/debunking-the-myths-about-the-basel-iii-endgame-regulation">Debunking the myths about the Basel III endgame regulation</a>," Jan. 18, 2024), the author is absolutely correct that the conversation about the possible increase in capital requirements must be based on facts. But from the very first sentence, the piece is filled with inaccuracies.First, just a<a href="https://www.bis.org/bcbs/implementation/rcap_reports.htm"> handful</a> of countries have implemented the agreement struck in Basel, Switzerland, in 2017. Like the United States, most of the jurisdictions around the world are at various stages of creating their rules. Thus far, the United States is proposing to increase capital to a<a href="https://fsforum.com/a/media/key-takeaways-b3e-comments.pdf"> much larger degree</a> for its global systemically important banks (GSIBs) than other jurisdictions. The U.K. is proposing a 3.2% increase for its GSIBs versus a 5.6% increase for the EU and an estimated 30% for U.S. GSIBs. The U.S. proposal's many inconsistencies with the international Basel agreement and Basel III endgame proposals in other jurisdictions would worsen, rather than improve, already substantial international discrepancies in capital requirements. Such divergences would harm the American economy and the ability of U.S. companies to compete internationally. So much for the stated goal of harmonizing international capital rules.Second, the implementation of the Basel III endgame for the largest U.S. banks has absolutely nothing to do with the regional banking turmoil last year. To the contrary, because of their strong capital positions, the largest U.S. banks were called upon by the government to step in and support the financial sector in March, putting billions of dollars of unsecured deposits into First Republic Bank to squelch contagion and give the Federal Deposit Insurance Corp. time to wind down the ailing institution.Federal Reserve Chair Powell has<a href="https://www.youtube.com/watch?v=627kC040sPU"> said</a> repeatedly that the nation's largest banks are "very strong" and a "source of strength." The largest U.S. banks have supported small and large businesses, households and communities, and helped to ensure smooth functioning financial markets during significant economic headwinds, such as the COVID-19 pandemic. In the past 15 years, U.S. GSIBs have more than tripled their common equity tier 1 capital to more than $900 billion. The largest U.S. banks also are subject to annual supervisory stress testing and have maintained capital<a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230628a.htm"> well in excess</a> of hypothetical losses estimated by those stress tests. These tests assume no emergency government support during an economic downturn.Finally, contrary to the author's statements, the largest U.S. banks and their more than 735,000 employees are<a href="https://fsforum.com/our-impact/essential-to-the-u-s-economy"> essential</a> to the strength and the competitiveness of the U.S. economy, supporting countless American households, businesses and governments every day, including those in historically underserved communities. In just one example, Forum members have invested more than $9.2 billion in Community Development Financial Institutions and committed more than $525 million to minority depository institutions since the beginning of 2020.The<a href="https://www.fdic.gov/resources/regulations/federal-register-publications/2023/2023-regulatory-capital-rule-large-banking-organizations-3064-af29.html"> comment letters</a> in response to the proposal are still coming in, but organizations across the country — including the NAACP, small businesses, manufacturers, local lawmakers and others — have raised concerns with the Basel endgame proposal, including its potential impact on people in historically underserved communities.The financial crisis was 15 years ago. The nation's largest banks are strong and they are essential to our economy. Higher capital requirements would do more harm than good. And that's a fact.&nbsp;Kevin Fromer is the President and CEO of the Financial Services Forum. &nbsp;

Opinion

Letter to the editor: Basel 'myths' are all too real for the financial services industry

This article originally appeared on <a href="https://fortune.com/2023/12/06/us-economy-could-face-perfect-storm-basel-iii-endgame-goes-into-effect-finance-banks-kevin-fromer/">Fortune</a>.&nbsp;The past three years of economic volatility have exacted a profound toll on many Americans, testing the resilience of households and businesses alike. During this period, the largest banks, fundamentally strengthened by a series of changes, have served as a source of support by extending enormous amounts of credit, helping customers navigate uncertainty, and stabilizing the broader banking sector at a critical moment. Now, as the CEOs of these banks gather on Capitol Hill, Congress must ask itself if proposed regulations on capital jeopardize the essential work of these institutions.The capital regulation plan known as Basel III Endgame will increase capital requirements by 20% or more for the eight largest U.S. banks. This is an excessive move, considering the <a href="https://fsforum.com/a/media/capital-and-the-nation%E2%80%99s-largest-banks.pdf">tripling</a> of high-quality capital for these banks over the past 15 years. Higher capital requirements, <a href="https://www.federalreserve.gov/newsevents/pressreleases/powell-statement-20230727.htm">as noted by Federal Reserve Chair Jerome Powell</a>, raise the cost of–and reduce access to–credit.The plan will certainly compound the burden of higher post-pandemic interest rates,&nbsp;<a href="https://www.urban.org/sites/default/files/2023-09/Bank%20Capital%20Notice%20of%20Proposed%20Rulemaking.pdf?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_axiosmarkets&amp;stream=business">particularly for those with lower incomes</a>. Americans will have a harder time getting a loan, securing a mortgage, or saving for their retirement or a child’s college education.The impact isn’t limited to individual consumers. Small businesses&nbsp;<a href="https://fsforum.com/news/capital-insights-new-bank-capital-rules-will-handicap-small-businesses">relying</a>&nbsp;on credit and farmers&nbsp;<a href="https://www.americanbanker.com/opinion/basel-endgame-will-drive-up-costs-for-american-farmers-and-consumers">needing</a>&nbsp;funds for operations and equipment will face difficulty securing much-needed capital.A chorus of voices from the left and the right have come out against this proposed rule. Bipartisan consensus is rare these days, so the growing coalition of policymakers, advocacy groups, and community leaders warning against the negative impacts of stricter capital requirements is not something to take lightly. Senator&nbsp;<a href="https://www.politico.com/newsletters/morning-money/2023/09/14/the-calls-are-coming-from-inside-the-house-dems-rap-biden-bank-cops-00115837">Mark Warner (D-Va.)</a>&nbsp;has emphasized the potential compounding effect of tougher capital standards, high interest rates, and disruptions in the commercial real estate market as a “perfect storm.” Senator&nbsp;<a href="https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=409027">John Tester (D-Mont.)</a>&nbsp;stated that he is worried about how this will impact working Americans, explaining he has “some concerns about the proposed changes, and what its impact will be on workers and households, small businesses, access to credit, and the overall vibrancy of our capital markets.”&nbsp;In a&nbsp;<a href="https://www.banking.senate.gov/imo/media/doc/basel_iii_banking_gop_letter.pdf">letter</a>&nbsp;to regulators, 39 Senate Republicans, led by Senator Tim Scott (R-S.C.), highlighted the resilience of the well-capitalized U.S. banking system and argued the proposal would negatively impact the economy while making credit costlier and more difficult to obtain for millions of Americans.Given these concerns, it is fair to ask why capital increases of this size are necessary. But no one seems equipped to provide an answer. On the contrary, the predominant official assessment of the banking sector, and the largest banks in particular, has been laudatory. As a matter of fact, every hypothesized loss the proposal aims to address has been experienced under real-life stress tests such as the pandemic, and the largest U.S. banks have continued to support the economy despite those losses under current capital requirements.Reflecting on the years of reform under the Dodd-Frank Act and Basel III, Chair Powell&nbsp;<a href="https://www.youtube.com/watch?v=627kC040sPU">highlighted</a>&nbsp;improvements in the banking system’s resilience, stating, “The large banks in the United States are very strong, well-capitalized, a lot of liquidity and they’ve been a source of strength, I think, through the last couple of events.”The future path of the U.S. economy is far from certain and hardworking Americans will pay a price if regulators demand new, unjustified capital requirements. Policymakers must demand extensive changes to the Basel III Endgame proposal so the banking sector can continue its essential role in the U.S. economy–and to avoid taxing consumers and businesses for no appreciable benefit to financial stability.Kevin Fromer is the president and CEO of Financial Services Forum.

Op-ed: The U.S. economy could face ‘a perfect storm’ if Basel III Endgame goes into effect. Here’s why

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

Letters

Joint Trades Letter to PWG on Digital Assets

Forum Response to Request for Information on Deposits

Brokered Deposits Comment Letter

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The Role of Big Banks in Community Infrastructure

Forum President and CEO Kevin Fromer highlights how the nation's largest banks fund essential community infrastructure projects, showcasing their commitment to fostering growth and prosperity in America's cities and counties.

Video

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

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Lending

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

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

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Liquid Capital Markets

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

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Our Employees

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

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


Essential to the U.S. Economy    

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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. 

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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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Maintaining the international competitiveness of U.S. companies is vital to the success and vibrancy of the U.S. economy. The nation’s largest banks provide crucial support for American companies competing overseas. The Forum supports policies that enable large U.S. banks to continue their vital support of the American economy on the global stage. 

International Competitiveness

Videos

Fact Sheet

Capital and the Nation’s Largest Banks

Observations and Recommendations for a New Administration and U.S. Economic Growth

Key Takeaways B3E Comments

Fact Sheets

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Member News

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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 &amp; 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 &amp; Company. She started her career at Goldman Sachs in the Mergers &amp; 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 Chair

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BNY 

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

Jamie Dimon is Chairman of the Board and Chief Executive Officer of JPMorganChase, 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

JPMorganChase Chairman And Chief Executive Officer

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Morgan Stanley

Edward (Ted) Pick is the Chief Executive Officer of Morgan Stanley.Before becoming CEO in 2024, Mr. Pick served as Morgan Stanley's Co-President, Co-Head of Firm Strategy and Head of the Institutional Securities Group, overseeing Investment Banking, Equities, Fixed Income, Global Capital Markets and Research.&nbsp;In previous roles, Mr. Pick was Global Head of Sales and Trading, engineering a turnaround of the firm’s Fixed Income Division. As Head of Institutional Equities, he led that business to a leading global position. He also served as Head of Equity Capital Markets, helping the firm actively raise capital during the financial crisis.&nbsp;Mr. Pick joined Morgan Stanley in 1990 and was promoted to Managing Director in 2002. He is a member of the firm’s Board of Directors (2024), Operating Committee (2012), Management Committee (2008) and Morgan Stanley-MUFG Steering Committee (2013).Mr. Pick graduated Phi Beta Kappa from Middlebury College (1990) and received an MBA from Harvard Business School (1994). He is a Trustee at the Metropolitan Museum of Art (2018), and serves on the MET’s Nominating &amp; Governance Committees. Mr. Pick is Chair of the Advisory Board for the Morgan Stanley Alliance for Children’s Mental Health and a board member of the Institute of International Finance.

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Ted Pick

Morgan Stanley Chief Executive Officer

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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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