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“Today’s stress test results reinforce that additional required capital is not justified. The reforms of the post-Dodd-Frank period have achieved the goals of a stronger, safer banking system,” Forum CEO says.
Washington, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today in response to the Federal Reserve Board’s 2023 stress test results:
“Today’s results reinforce the strong capital positions of the largest U.S. banks. These banks have once again shown that they are strong, resilient, and continue to support customers and communities even in the face of a significant economic downturn.
“The scenarios used in this year’s test represent a continuation of the highly rigorous standards applied to the largest banks in the United States. Since 2010, U.S. Global Systemically Important Banks (GSIBs) have more than tripled their Common Equity Tier 1 capital, the most loss-absorbing capital that acts as a buffer against losses, to $899 billion. This strength has positioned them during the real-life stress tests of the pandemic and the recent banking turmoil to act as a bulwark for the economy and the financial sector.
“Policymakers have repeatedly underscored the strong capital positions of the nation’s largest banks and how well they have performed in times of economic stress. And GSIB capital requirements are increasing each year regardless of any rule changes.
“Today’s stress test results reinforce that additional required capital is not justified. The reforms of the post-Dodd-Frank period have achieved the goals of a stronger, safer banking system.
“New regulations that increase required capital would only make it more costly for families and small businesses to get a loan, and reduce credit availability — particularly for those at the margins. They would also worsen the competitive position of our economy and U.S. banks, which face higher requirements than their foreign competitors.
“New capital requirements would also impact our economy at a time of significant economic uncertainty because, as Federal Reserve research has shown, banks will be expected by market participants to meet higher capital requirements nearly immediately, despite the timeframe for compliance.”
Go to smartbankcapital.com to learn more about the strength and resiliency of the nation’s largest banks and the costs of higher capital requirements.
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The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.