New Report Highlights Growing Burden of U.S. GSIB Surcharge on American Economy

Contact: Laura Peavey

(202) 457-8770

lpeavey@fsforum.com

New Report Highlights Growing Burden of U.S. GSIB Surcharge on American Economy

Washington D.C. – The Financial Services Forum today released a research paper analyzing the growing capital surcharges imposed on U.S. global systemically important banks (GSIBs) and the broader implications for the financial system and economy.

A GSIB score is intended to measure how much systemic risk a bank poses to the financial system. The higher the score, the more capital the bank must maintain. While capital is intended to absorb losses, the paper highlights how unnecessarily high capital requirements have been shown to limit U.S. banks’ ability to lend and to compete with their international peers who face lower requirements—ultimately harming American consumers and businesses.

Key Findings:

Rising GSIB Surcharges: The analysis shows that capital surcharges for U.S. GSIBs have continued to increase, largely driven by growth in safe assets such as bank reserves and U.S. Treasuries.
Uneven Global Standards: Unlike their international counterparts, U.S. GSIB scores are not adjusted for overall financial system growth, resulting in disproportionately higher scores and surcharges for U.S. banks.
Economic Implications: Without reform, GSIB scores and surcharges are expected to continue rising, potentially constraining bank lending and posing broader economic challenges.
The paper’s findings call for a reassessment of the GSIB scoring methodology to ensure it accurately reflects systemic risk and promotes a level playing field for U.S. financial institutions and the customers they serve.

Read the full paper here and an accompanying blog here.

###The Financial Services Forum is an economic policy and advocacy organization whose members are the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.