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Sean Campbell

Chief Economist, Head of Policy Research

<h3>Introduction</h3>Recently, bank regulators issued a proposal to modernize the supplementary leverage ratio (SLR) after the Federal Reserve publicly <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210319a.htm">committed</a> to do so in 2021.&nbsp; The proposal contains an economic analysis showing that the impact of the proposal on institution-level capital is de minimis – required capital for all affected institutions would decline by less than two percent.&nbsp; One part of the economic analysis showed that narrow, bank subsidiary-level capital requirements would decline by a larger amount.&nbsp; The identified decline in narrow, bank subsidiary-level capital requirements has been cited by some to argue that the proposal would significantly weaken capital requirements.&nbsp; This interpretation confuses broad, institution-level capital requirements with narrow, bank subsidiary-level requirements and fails to understand how the two requirements relate to each other – both in theory and in practice.&nbsp; In this blog, we review the difference between institution-level and bank subsidiary-level capital requirements, discuss the economic relationship between these requirements, and empirically demonstrate that a reduction in bank subsidiary-level requirements not matched by a similar decline in institution-level requirements has no meaningful impact on an institution’s capital or resiliency.<h3>Bank Holding Companies (BHCs) and Banks</h3>What exactly is Bank of America?&nbsp; For that matter what exactly is JPMorganChase or Wells Fargo or any other large “bank” that people regularly engage with on a daily basis?&nbsp; Most people would likely respond - “well, I guess Bank of America is a bank.”&nbsp; And that’s right – sort of.&nbsp; Bank of America is actually a bank holding company, or “BHC.”&nbsp; The full name of “Bank of America” is actually Bank of America Corporation.&nbsp; Bank of America Corporation (BAC) is a large and diverse holding company that contains a bank (Bank of America, National Association, or “BANA”), a securities dealer (BofA Securities), an asset manager (Merrill Lynch), and a variety of other operating companies and subsidiaries that work in tandem to bring households, communities, and businesses a diverse range of important and valuable financial services.Why does this – admittedly Jeopardyish – technical distinction matter?&nbsp; It matters because the financial health and resilience of “Bank of America” refers to the health and resiliency of the entire corporation and not just “the bank.”&nbsp; Moreover, the holding company maintains capital that supports the resilience of the entire organization.&nbsp; When media outlets, bank analysts and others report on “the earnings of Bank of America,” “the capital of Bank of America,” or “the share price of Bank of America,” they mean the earnings, capital, and share price of the entire corporation (BHC) because that is the most comprehensive and economically relevant institution.<h3>BHC and Bank Capital Requirements</h3>Bank holding companies are regulated by the Federal Reserve.&nbsp; Banks are regulated at the Federal level by one of three regulators – the Office of the Comptroller of the Currency (OCC), the Federal Reserve, or the Federal Deposit Insurance Corporation (FDIC).&nbsp; Bank of America, National Association (BANA), for example, is regulated by the OCC.The Federal Reserve establishes capital requirements for all BHCs (Bank of America Corporation).&nbsp; Bank regulators establish capital requirements for banks (Bank of America, National Association).&nbsp; In general, the Federal Reserve’s BHC capital requirements are larger and significantly more stringent than bank subsidiary-level capital requirements set by bank regulators.&nbsp;For example, as of the first quarter of 2025, Bank of America Corporation had total assets of $3.3 trillion.&nbsp; In the same quarter, Bank of America, National Association, maintained total assets of $2.6 trillion.&nbsp; The Fed’s BHC capital requirements apply to all $3.3 trillion in assets while the bank subsidiary-level capital requirements only apply to the $2.6 trillion of assets on the balance sheet of the bank.&nbsp; Accordingly, BHC capital requirements are broader, institution-level capital requirements that support the safety and soundness of the entire financial institution.To further demonstrate the difference in bank holding company and bank subsidiary-level requirements, all banks are subject to a bank subsidiary-level (Tier 1) capital requirement of 8.5%, while BHC (Tier 1) capital requirements vary based on factors such as the result of the Federal Reserve’s annual stress test.&nbsp; The table below shows the difference between BHC and bank subsidiary-level capital requirements for Financial Services Forum members.<figure class="image"><img src="https://fsforum.com/a/media/7.29.25-blog-chart-part-2.jpg"></figure>Reviewing the table shows that Forum members are subject to significantly stricter capital requirements at the BHC level than at the bank subsidiary-level.&nbsp; On average, Forum members are subject to a capital requirement that is roughly four percentage points higher at the BHC level (12.6% vs 8.5%).&nbsp;What does this mean exactly?&nbsp; Imagine a BHC that only contained a bank.&nbsp; If the bank had total assets of $100, the BHC would be required to maintain $12.60 in capital while the bank would be required to maintain $8.50 in capital.&nbsp; Ultimately, how much capital is actually required?&nbsp; The institution must maintain the higher of the two amounts - $12.60.&nbsp; And herein lies the rub.&nbsp; When bank subsidiary-level capital requirements are eclipsed by stricter and more stringent BHC capital requirements, the bank subsidiary-level requirements become considerably less relevant.An analogy is of some use to fully contemplate the economic mechanism at play.&nbsp; Imagine that as a teenager you want to stay out late after Homecoming.&nbsp; Suppose Dad is a softie, and Mom lays down the law at home.&nbsp; Suppose further that Mom has a strictly enforced curfew of midnight while Dad will look past a return to the homestead in the wee hours of the morn’.&nbsp; Now imagine working over Dad before Homecoming and ultimately he relents and agrees that returning home at 1 a.m. is OK.&nbsp; Does this help?&nbsp; Not if Mom holds firm at a midnight curfew.&nbsp; The issue is exactly the same in the world of bank capital.&nbsp; Reducing a bank subsidiary-level capital requirement is of limited relevance if the more stringent BHC requirement is unaffected.Pointing to lower bank subsidiary-level capital requirements as a sign of a weaker capital regime is misleading because it ignores the important interplay between BHC and bank subsidiary-level requirements.&nbsp; It similarly ignores the fact that, for large banks, BHC capital requirements are more stringent, rendering reductions in bank subsidiary-level requirements considerably less relevant.<h3>BHC and Bank Subsidiary-Level Capital – What Do the Data Show?</h3>The discussion above makes the economic case for why a narrow focus on bank subsidiary-level requirements that ignores broader institution-level capital requirements is misguided.&nbsp; But what do the data say?&nbsp; Ultimately, we should corroborate the conceptual economic case with real world data.&nbsp;Consider the chart below that depicts aggregate (Tier 1) capital requirements at the BHC and bank subsidiary-level for Forum members.&nbsp; Each bar shows the requirement (grey) and the excess capital above and beyond the requirement (blue).&nbsp; At the narrow bank subsidiary-level, in 2024, Forum members maintained $914 billion in capital (grey+blue).&nbsp; The bank subsidiary-level requirement was – a much lower - $525 billion (grey).&nbsp; In aggregate then, Forum members were maintaining excess capital at the bank subsidiary-level of roughly $400 billion.&nbsp; At the broader BHC level, Forum members maintained roughly $1.1 trillion in capital while the BHC requirement was roughly $926 billion.&nbsp; In aggregate, Forum members maintained excess capital at the BHC level of roughly $175 billion.<figure class="image image_resized" style="width:82.07%;"><img src="https://fsforum.com/a/media/7.29.25-blog-part-3.png"><figcaption>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Source: Federal Reserve Y-9C, FFIEC Call Reports</figcaption></figure>A few things about this data are worth noting.&nbsp; First, as discussed, both capital maintained (grey + blue) and capital required (grey) are substantially higher at the BHC than at the bank.&nbsp; Second, and importantly, at the bank subsidiary level, banks are maintaining a significant amount of excess capital over and above the requirement of nearly $400 billion.&nbsp; At the BHC level, the amount of excess capital is much more modest at less than $200 billion.What explains the large difference in excess capital at the bank and BHC?&nbsp; Why, for example, doesn’t the bank simply reduce its excess bank subsidiary-level capital from $400 billion to, say, $100 billion?&nbsp; The answer is that doing so would run afoul of the stricter BHC requirement.&nbsp; Accordingly, banks regularly maintain significant excess capital at the bank subsidiary level to comply with stricter and more relevant BHC-level capital requirements.<h3>Conclusion</h3>Robust capital standards are an important safeguard for our financial system’s safety and soundness.&nbsp; The Federal Reserve’s recent proposal to modernize the Supplementary Leverage Ratio will not have an appreciable impact on institution-level bank capital.&nbsp; Claims that the proposal weakens bank capital standards are misguided because they conflate bank subsidiary-level and BHC capital standards and fail to recognize the important economic relationship between the two standards.&nbsp; BHC-level capital is a financial resource that supports the resilience of all the activities undertaken by the BHC.&nbsp; BHC-level requirements are more comprehensive and generally more stringent than bank subsidiary-level requirements.&nbsp; Accordingly, a narrow focus on bank subsidiary-level requirements is inappropriate when evaluating the health and safety of the banking and financial system. &nbsp;&nbsp;

BankNotes Blog

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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

The “Bank” Capital Shell Game: Would the Real Bank Capital Requirement Please Stand Up? 

<h2>Introduction</h2>Earlier this week, the Federal Reserve held a conference to consider the state of the capital regime for large banks.&nbsp; The event was excellent for several reasons.&nbsp; First, the event openly recognized the need to review, reconsider, and reform the large bank capital regime.&nbsp; Fifteen years post-crisis, much of the large bank capital regime has gone unexamined and has not kept pace with the realities of the banking sector or our economy.&nbsp; Second, the conference engaged a wide array of stakeholders with views from academics, industry experts, and former regulators.&nbsp; The conference neither unapologetically rationalized the existing framework, nor reflexively argued that the entire framework was faulty.&nbsp; Rather, the conference took a hard, introspective look at a capital framework that was engineered well over a decade ago and asked important and tough questions about how it can best serve our economy for the future.In this post, we provide some specific reactions to the conference that we hope can add to the public conversation about the future of the large bank capital regime.&nbsp; For the sake of brevity, our reactions are targeted and limited.&nbsp; Interested readers are invited to check out the entire conference on <a href="https://www.youtube.com/watch?v=zKh-6QvQfqA">YouTube</a> for the full presentations and discussions.&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<h2>Leverage Reform</h2>One panel considered the case for leverage ratio reform.&nbsp; The panel broadly recognized the need for leverage reform given the significant changes to the economy and financial system since the supplementary leverage ratio (SLR) was introduced in 2015.&nbsp; Namely, post-COVID the level of bank reserves and U.S. Treasuries in circulation has expanded massively, making the SLR increasingly binding for large banks.&nbsp; The level of safe assets in today’s economy simply was not contemplated in 2015.&nbsp; Consequently, leverage ratios have moved from their intended roles as “backstops” to “frontstops,” dis-incentivizing a host of important bank activities such as intermediation in the U.S. Treasury market.One comment from the panel is noteworthy.&nbsp; Some commentary suggested that leverage ratios are needed because “risk-based requirements may be wrong.”&nbsp; This statement is undoubtedly true because all risk assessments are inherently uncertain.&nbsp; But the prescription that “we need leverage ratios” simply does not follow as a result.&nbsp; While risk-based requirements “may” be wrong, it is also the case that the capital requirement implied by a leverage ratio is “certainly wrong.”&nbsp; Accordingly, and somewhat glibly, two wrongs do not make a right.&nbsp; What then is the answer?&nbsp; If the risk assessments underlying risk-based requirements are uncertain and imperfect, regulators should invest time and attention to regularly review risk-based requirements in an open, transparent, and data-based manner.&nbsp; Constantly striving to improve a risk-based capital regime is always better than outsourcing capital requirements to an anachronistic and undoubtedly incorrect capital requirement.<h2>The Evolution of Capital</h2>One panel was devoted to the general question of “how did we get here” from a capital perspective.&nbsp; As discussed, the large bank capital regime that we have today was engineered well over a decade ago.&nbsp; And like most things in life, it has grown and changed over time for reasons that are, in many cases, unanticipated and unintended.&nbsp; Taking regular stock of the regulatory regime and asking, “how did we get here” and “does this still make sense today” is an excellent exercise that should be repeated with regularity.One critical point made during the panel relates to the current level of capital among large banks and the oft repeated refrain that reform should be “capital neutral.”&nbsp; An important fact to consider is that between the fourth quarter of 2020 and the fourth quarter of 2024, capital requirements for Forum members grew by eighteen percent, or by $125 billion.&nbsp; This observation is critically important to consider in the context of calls for “capital neutrality.”&nbsp;<figure class="image"><img src="https://fsforum.com/a/media/7.25.25-blog.png"></figure>As far back as 2019 Federal Reserve officials, including Chairman Powell, have publicly stated that large bank capital levels are “about right.”&nbsp; Against this backdrop, capital requirements for the largest banks have grown steadily.&nbsp; As a result, when suggesting that capital reform be “neutral” it is important to ask, “neutral relative to what capital level?”&nbsp; Simply calling for “capital neutrality” in an environment of steadily rising requirements is, at best, an incomplete prescription.<h2>GSIB Surcharge</h2>One panel was devoted to a requirement for Global Systemically Important Banks (GSIBs), the GSIB surcharge, which is an important capital requirement for Forum members.&nbsp; There was a clear recognition on the panel that since the GSIB surcharge was adopted in 2015, GSIB surcharges had “drifted” steadily upwards for reasons that were well-understood back in 2015.&nbsp; Policy inertia has resulted in a GSIB surcharge that no longer reflects any reasonable notion of “systemic risk” and is out of step with today’s banking and financial system.Two points from the panel are worth emphasizing.&nbsp;First, the U.S. is an outlier relative to the rest of the world.&nbsp; In 2015, the U.S. implementation of the GSIB surcharge was calibrated to be more stringent than the international standard.&nbsp; Over time, this excessive stringency has increased due to policy inaction.&nbsp; Moreover, there has been little to no discussion or rationalization of the increase in stringency relative to the international standard since 2015.&nbsp;<figure class="image"><img src="https://fsforum.com/a/media/7.25.25-blog-part-2.png"></figure>Second, the current structure and calibration of the GSIB surcharge will continue to result in mechanically rising capital levels for Forum members (U.S. GSIBs) until the framework is reformed.&nbsp; This is an issue we have raised in previous <a href="https://fsforum.com/news/to-infinity-and-beyond-the-supply-of-safe-assets-and-gsib-capital-surcharges">posts</a> as well as a more detailed <a href="https://fsforum.com/a/media/gsib_paper_6.2.25.pdf">research</a> paper.&nbsp; In particular, the gap between the capital requirements for U.S. GSIBs and smaller banks is wide and will continue to widen until the GSIB surcharge is reformed.&nbsp; Given the events surrounding the regional bank turmoil of 2023, it is entirely fair to question whether a widening of the gap in capital between U.S. GSIBs and other banks is sensible policy.&nbsp; Finally, it should be noted that GSIB surcharges are continuing their unabated upward march.&nbsp; Specifically, several Forum members will see increased GSIB surcharges beginning in January of 2026 given the mechanical and backward-looking nature of the GSIB surcharge rule.&nbsp; Regulators should consider halting any oncoming increases to GSIB surcharges until after the GSIB surcharge rule has been reformed.&nbsp;<h2>Stress Tests</h2>Like other elements of the large bank capital regime, the stress tests were born during the crisis under a specific set of stressful and unique circumstances.&nbsp; Since that time, little has been done to reconsider and rationalize the existing system.&nbsp; Recently, however, the Federal Reserve has embarked on an important project to reconsider and reform the stress testing process.&nbsp; The effort should be applauded and supported.One issue that was discussed on the stress testing panel was the use of so-called “Pillar II” capital requirements to implement stress testing requirements as is done in the UK and Europe.&nbsp; In a nutshell, Pillar II requirements are essentially capital requirements that are determined through supervisory discretion with some input from the banks being regulated.The Pillar II approach was described by some as a more nuanced and flexible approach to using stress tests to calibrate large bank capital levels.&nbsp; This reasoning is highly problematic.&nbsp; Such an approach is at direct odds with the reform program that has already been announced by the Federal Reserve to provide more transparency on the stress tests.&nbsp; Also, a Pillar II approach preserves, and indeed would codify, a key flaw with the existing stress testing program: opacity.&nbsp; Capital requirements that are prescribed by supervisors based on their own private view of a bank’s resiliency, no matter how well informed, are inherently opaque.&nbsp; And opaque regulation invites policy volatility as policy views change with changes in political and regulatory leadership.&nbsp; Finally, even if banks themselves have some insight and agency in the setting of such Pillar II requirements, the public is kept completely in the dark.&nbsp; As a result, the information provided by the stress test would become significantly less informative and useful to the public.<h2>Conclusion</h2>This week’s capital conference at the Federal Reserve marked an important step forward in modernizing the large bank capital regime.&nbsp; In the marketplace of ideas, this conference provided much food for thought that will surely prove helpful to regulators as they chart the course ahead.&nbsp; Now, the onus is on the regulatory community to take these ideas and move forward deliberately and expeditiously with capital reform.&nbsp; As this happens, regulators should continue their public outreach to assess their progress and strive to ensure safety and stability while promoting economic growth.&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;

Reflections on the Federal Reserve’s Integrated Review of the Capital Framework for Large Banks

<h3>Introduction</h3>This week, the Federal Reserve Board, OCC and FDIC issued a proposal to reform the supplementary leverage ratio (SLR).&nbsp; Reform of the SLR has been anticipated for years – ever since the Federal Reserve <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210319a.htm">committed</a> to propose permanent reform during the COVID pandemic when the deficiencies &nbsp;of the SLR became all too apparent.&nbsp; The proposal and comments from several Fed board members lay out a balanced and rational analysis for the public to examine and comment on.&nbsp; However, there were also a variety of specious claims about the proposal and its effects, which are important to address promptly.<h3>The Proposal Does Not Significantly Reduce Required Capital for U.S. GSIBs</h3>Some have suggested that the Federal Reserve’s proposal will significantly reduce capital for U.S. GSIBs (all of which are Forum members) by more than 20 percent.&nbsp; This claim is both incorrect and at odds with the Federal Reserve’s own analysis.&nbsp;Capital requirements are applied, first and foremost, at the top-tier holding company level and not at the level of a single subsidiary.&nbsp; This is akin to measuring your financial well-being by considering all of your assets and liabilities.&nbsp; If your 401k retirement savings increases by $100,000 while your house value declines by $10,000 then we should all agree that your total wealth has increased by $90,000 and not fallen by $10,000.At the top-tier holding company level, the Federal Reserve’s own <a href="https://www.federalreserve.gov/aboutthefed/boardmeetings/files/leverage-ratio-memo-20250625.pdf">analysis</a> indicates that the proposal will reduce tier 1 capital by $13 billion or about 1.4 percent.&nbsp; The capital stock at the top-tier holding company is available to absorb any and all losses throughout the entire corporate entity and is the capital level that matters for bank safety and soundness as well as financial stability.&nbsp; To put this into further perspective, the eight GSIBs collectively maintain $1.1 Trillion in tier 1 capital.Indeed, when the Federal Reserve discusses bank capital levels – either in its Financial Stability Report, or its Supervision and Regulation Report, or in its semi-annual testimony to Congress – it generally cites top-tier holding company capital levels.Attempts by some commentators to style the Federal Reserve’s proposal as resulting in a large decline in capital are looking narrowly at bank subsidiary capital levels that do not consider the entirety of the financial resources available to the top-tier holding company.&nbsp;&nbsp;&nbsp; Looking at the complete picture, it is clear that the impact on capital levels would be extremely modest. &nbsp;&nbsp;&nbsp;<h3>The Proposal Improves Incentives to Engage in All Low-Risk Activities – Both Under Normal Conditions and Times of Stress</h3>Another claim made about the proposal is that it won’t improve the incentives to intermediate U.S. Treasury markets&nbsp; - either under normal conditions or in times of stress.&nbsp; This statement ignores both the basic logic behind the proposed reform as well as our lived experience with this part of the capital framework.On the theory side, the logic is clear.&nbsp; A capital rule that charges the same requirement to all assets provides clear disincentives to engage in low-risk assets that provide commensurately lower returns.&nbsp; This is not a complex argument.&nbsp; Anyone who runs a business or makes economic decisions can relate.&nbsp; If the cost of doing a range of different activities does not vary but the benefit is highest for one particular activity which would you choose?&nbsp; The activity with the highest benefit will clearly be chosen among all others.&nbsp; In the case of intermediating the U.S. Treasury market, why should banks engage in that relatively low-risk and low-return business if the capital cost is identical to the cost of making more profitable business loans?&nbsp; Clearly, the effect of a one-size fits all capital requirement like the SLR is to disadvantage relatively low-risk activities such as intermediating the U.S. Treasury market.On the empirical side, the recent lived experience of the COVID pandemic provides a useful laboratory in which to test the theoretical prediction.&nbsp; During the pandemic, one of the most stressful periods in global history, the Federal Reserve temporarily excluded U.S. Treasuries from the SLR computation thereby reducing the binding nature of the SLR.&nbsp; What happened during this stressful period?&nbsp; Significant research including research conducted by economists at the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4175429">Federal Reserve</a> and economists at the <a href="https://www.bostonfed.org/publications/current-policy-perspectives/2025/relaxing-dealers-risk-constraints-can-make-treasury-market-liquid.aspx">Federal Reserve Bank of Boston</a> have convincingly shown that during this stressful period large banks engaged more significantly in the U.S. Treasury market which reduced Treasury market volatility and trading costs.&nbsp; Accordingly, both the theory and practice of economics is fully consistent with the prediction that easing the binding nature of risk-blind leverage requirements will improve bank engagement in low-risk activities during both normal times and periods of stress.Relatedly, some commentators have raised a concern that the recent SLR proposal might simply incentivize large banks to engage in other low-risk activities besides U.S. Treasury market intermediation.&nbsp; It is certainly true that a less binding SLR will improve the incentives for banks to engage in all low-risk activities.&nbsp; We should applaud this development in which markets, rather than government fiat, determine which activities are undertaken by banks for the benefit of the broader economy.<h3>The Proposal is Fully Transparent</h3>Beyond the two arguments above, some have suggested that the Federal Reserve’s SLR proposal is not transparent because it relies on the internationally agreed upon (Basel) GSIB surcharge for each U.S. GSIB (Forum member).&nbsp; In fact, the Basel GSIB surcharge is fully transparent and widely available to the public and has been for years.&nbsp; Each year the Financial Stability Board publishes a <a href="https://www.fsb.org/2024/11/2024-list-of-global-systemically-important-banks-g-sibs/">list</a> of global GSIBs along with the corresponding Basel GSIB surcharge level.&nbsp; Further, the Office of Financial Research (OFR) maintains a public <a href="https://www.financialresearch.gov/bank-systemic-risk-monitor/">website</a> that is devoted to tracking Basel GSIB surcharges for all global banks.&nbsp; Finally, the Federal Reserve itself collects and makes public all of the data that is needed to calculate the Basel GSIB surcharges.&nbsp; Accordingly, there is no reasonable sense in which tailoring the SLR to each bank’s Basel GSIB surcharge is anything but fully transparent.<h3>Conclusion</h3>Years ago, the Federal Reserve committed itself to reconsider the SLR in light of its increasingly binding nature that was brought on by long-lived and active policy choices of the Federal Reserve and the U.S. government during the pandemic.&nbsp; The Federal Reserve and other agencies have now made good on this promise. The proposal represents an important first-step in improving the large bank capital regime.&nbsp; The proposal does not, however, significantly reduce large bank capital, frustrate incentives to intermediate the U.S. Treasury market, or reduce the transparency of large bank capital regulation.&nbsp; Any such claims are both misleading and demonstrably false. &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;

Press Releases

A Level Set on the Proposal to Reform the Supplementary Leverage Ratio 

Dear reader,In this issue, we spotlight one of our member institution’s perspectives on improvements to a significant part of the large bank capital framework and what they could mean for the functioning and strength of the vital U.S. Treasury market.&nbsp;&nbsp; Fifteen years post-crisis, much of our large bank capital regime has largely gone unexamined and no longer reflects the realities of our financial system and the needs of our economy.&nbsp; An update to the leverage capital ratio is one of several important areas of reform.On a personal note, this will be my final Forum File. It’s been a privilege to share these updates with you, and I’m gratified by the continued accomplishments of the institutions represented by the Financial Services Forum. &nbsp;Thanks for your interest in the work of this organization and its members. &nbsp;Kevin Fromer, President and CEO, Financial Services Forum<h2>Penny For Your Thoughts</h2>Tiffany Eng, Global Treasurer for BNY<h3> Regulators are revisiting leverage ratios to improve Treasury market resilience. From your vantage point as Global Treasurer, what’s the key issue at stake here?</h3>At its core, this is about ensuring the Treasury market remains liquid and resilient, especially in times of stress. The Treasury market plays a critical role in the global financial system — not only are Treasuries used as collateral and for liquidity management, but they also underpin close to $1 trillion in cash and $5 trillion in financing transactions daily. When we think about regulatory frameworks like the SLR or Tier 1 leverage ratio, we’ve seen they can inadvertently disincentivize Treasury market intermediation when it’s needed most— during periods of elevated volatility. It’s increasingly important during these periods of stress that banks can provide liquidity and ensure the Treasury market functions in an orderly manner, when banks act as shock absorbers for both cash and Treasuries.So the key issue is whether the current leverage rules are overly binding on cash and Treasuries, particularly in crisis scenarios when deposit balances may rise and Treasury intermediation is needed, limiting banks’ ability to support markets that rely on us.<h3>There’s an ongoing debate — should regulators lower leverage ratios across the board, or take a more targeted approach excluding safe assets like reserves and Treasuries? What’s your view?</h3>This is not a binary choice. Each option addresses different aspects of the issue. Lowering leverage requirements overall helps ease constraints and re-establishes leverage ratios as a backstop rather than a binding constraint. But banks could use that additional capacity for any number of purposes, not necessarily Treasury market intermediation, and that capacity – if already re-allocated by banks - may not be available in a time of stress.A more targeted fix — excluding cash reserves, Treasury repos, or bills — would directly improve the capacity to support cash and Treasury market liquidity. That’s particularly helpful in periods of stress when you need intermediaries to step in and balance markets. My view is that a combination of approaches, along with tools like the standing repo facility and central clearing enhancements, is likely the most effective and prudent path forward.<h3>How should reforms be timed — should we wait for the next crisis to act, or take proactive measures?</h3>The Treasurer’s mindset is always to prepare, not predict. We’re constantly managing across a wide set of risks — capital, liquidity, interest rate — and stress-testing our position against many different scenarios. It’s much more impactful to put structural and permanent solutions in place now, before stress conditions materialize. That way, we foster the right behaviors and reduce reliance on temporary or emergency measures later on.We don’t position our balance sheet assuming regulators will step in during a crisis. Instead, we plan with the regulations as they exist today. From that perspective, reforms that provide clarity and durability are more effective and help to ensure that the banking sector can continue to function as a source of stability.<h3>What principles should guide leverage ratio reform from a long-term perspective?</h3>The most important principle is that policy should be targeted to the problem we’re trying to solve. Leverage ratios are one piece of a larger prudential framework — they provide a backstop but aren’t well-suited to capture liquidity risk or interest rate risk. Reforming any single measure in isolation risks making another constraint more binding, without addressing the underlying structural issue.That’s why I support a holistic, resilient approach. Reforms should support both safety and liquidity in the Treasury market — which is the world’s premier government bond market — while reinforcing sound, risk-based management practices. As the market grows, our regulatory frameworks should evolve too, allowing banks to serve as resilient intermediaries through all conditions.<h2>Value Add</h2>BNY’s Enduring Commitment to Pittsburgh<figure class="image image_resized" style="width:80.53%;"><img src="https://fsforum.com/a/media/bny-ff-office.png"></figure>BNY continues to demonstrate its long-term commitment to Pittsburgh through the renovation and expansion of its campus in the city—one of six strategic global locations for the company and its largest employee base in North America. This investment reflects a broader dedication to supporting clients, empowering employees, and strengthening ties with the local community.Pittsburgh has long played a central role in shaping American industry and innovation, from steel production to the emerging frontier of artificial intelligence. It is also where Mellon Financial—founded more than 150 years ago by Judge Thomas Mellon and his sons—laid the groundwork for what would become a leading global financial institution.Today, BNY’s presence in Pittsburgh spans all lines of business, serving over 500 regional clients.&nbsp; Its campus plays a key role in advancing the firm’s artificial intelligence capabilities—driving efficiencies, enhancing client service, and powering the future of finance.&nbsp; The firm is also a major employer of graduates from local universities, including Carnegie Mellon, Pitt, Penn State, and Duquesne, and supports alternative talent pathways through partnerships like Year Up. Over the past decade, BNY has donated $50 million to the region and maintains leadership roles across prominent civic organizations, reflecting a continued commitment to the city’s growth and vitality.Through continued investment in innovation, talent, and community, Pittsburgh remains a vital part of BNY’s long-term vision, both as a center of excellence and as a city where the future of finance continues to take shape.<h2>Capital Gains</h2>What we’re doing in WashingtonSupport for modernizing capital rules to better serve the U.S. economy gained more traction during the Federal Reserve’s recent conference on large bank capital requirements. See&nbsp;<a href="https://fsforum.com/news/icymi-support-for-bank-capital-requirement-reform-continues-to-build">key takeaways</a> from industry leaders and policy experts and check out our latest <a href="https://fsforum.com/a/media/capital-reform-for-the-largest-u.s.-banks.pdf">factsheet</a> outlining our capital reform priorities.In related news, &nbsp;Forum President and CEO Kevin Fromer <a href="https://fsforum.com/news/forum-welcomes-proposal-to-refine-large-bank-supervisory-ratings">welcomed</a> the Federal Reserve’s proposal to reform supervisory ratings for large banks, noting that these changes will “not only strengthen the oversight of large financial institutions, but also promote greater confidence among investors, consumers, and the broader economy.”<figure class="image image_resized" style="width:84.22%;"><img src="https://fsforum.com/a/media/fsf-social-forum_file-1-0725updates_quotenoimage.png"></figure>Additionally, the Forum <a href="https://fsforum.com/news/financial-services-forum-congratulates-jonathan-gould-on-confirmation-as-comptroller-of-the-currency">applauded</a> the Senate’s confirmation of Jonathan Gould as Comptroller of the Currency. “The Forum looks forward to working with Comptroller Gould and his team to advance policies that support consumers, businesses of all sizes, and America’s communities,” Fromer said.Looking ahead, the Forum is preparing for a leadership transition. After eight years of dedicated service, Kevin Fromer will be stepping down. We’re excited to <a href="https://fsforum.com/news/forum-names-amanda-eversole-president-and-chief-executive-officer">welcome</a> Amanda Eversole, Executive Vice President and Chief Advocacy Officer at the American Petroleum Institute, as our next President and CEO.<h2>Our Two Cents</h2>Research from the ForumThere’s been a lot of conversation around the proposed changes to the Supplementary Leverage Ratio (SLR) and what it could mean for bank capital levels. A new Forum analysis helps put those numbers in perspective.The proposal would reduce Tier 1 capital for large banks by about $13 billion— or just 1.4%. That might sound like a lot, but in the context of typical year-over-year shifts driven by regulation, market conditions, or banks’ own strategies, it’s a relatively small adjustment.To help illustrate this, we’ve included a chart showing how capital levels often fluctuate. The takeaway? This reform wouldn’t meaningfully lower the capital required for U.S. GSIBs.<figure class="image image_resized" style="width:88.83%;"><img src="https://fsforum.com/a/media/fsf-social-forum_file-1-0725_725_graph.png"></figure>&nbsp;Turning to broader regulatory developments, the latest posts of the BankNotes Blog feature key insights from the Forum research team:<ul><li><a href="https://fsforum.com/news/reflections-on-the-federal-reserve-s-integrated-review-of-the-capital-framework-for-large-banks">Reflections on the Federal Reserve’s Integrated Review of the Capital Framework for Large Banks</a>&nbsp;provides an even deeper dive into the discussions surrounding necessary reforms to the leverage ratio, GSIB surcharge, and stress testing framework.</li><li><a href="https://fsforum.com/news/a-level-set-on-the-proposal-to-reform-the-supplementary-leverage-ratio">A Level Set on the Proposal to Reform the Supplementary Leverage Ratio</a> highlights how the proposed SLR reform supports safer banking practices, maintains transparency, and doesn’t significantly reduce capital.</li><li><a href="https://fsforum.com/news/to-infinity-and-beyond-the-supply-of-safe-assets-and-gsib-capital-surcharges">To Infinity and Beyond? The Supply of Safe Assets and GSIB Capital Surcharges</a> explores how rising GSIB surcharges may be limiting U.S. banks’ ability to lend and compete—potentially hurting American consumers and businesses.</li></ul><h2>Checking the Balance</h2>Members in the newsBank of America’s&nbsp;Sports with Us Clinic in Los Angeles&nbsp;<a href="https://urldefense.com/v3/__https:/www.linkedin.com/posts/bank-of-america_bettermoneyhabits-activity-7348385141146181634-heFB/?utm_source=share&amp;utm_medium=member_desktop&amp;rcm=ACoAACmiWu4BwFZjjchdOS8BxnjLXmLgBgfAxCM__;!!I2XIyG2ANlwasLbx!VueMa5R_hcE4iFRaj-nLNkgfHRGtUJ5jDQzMnvXG8sT5eFJOF-ueJ5SsYRVNG1-x3kQ37gqO1fjTveyS$">teamed up</a>&nbsp;with local groups, including the Boys &amp; Girls Club, the Dodgers, the Rams, and former professional soccer player Mia Hamm to give young athletes a day of hands-on training and a boost in financial skills such as budgeting and resilience.To mark&nbsp;BNY’s&nbsp;241st birthday, employees around the world&nbsp;<a href="https://www.linkedin.com/posts/bnyglobal_pittsburgh-lifeatbny-activity-7345519801982697473-Rddi?utm_source=share&amp;utm_medium=member_desktop&amp;rcm=ACoAACmiWu4BwFZjjchdOS8BxnjLXmLgBgfAxCM">volunteered</a>&nbsp;their time to support local communities from Pittsburgh to Pune, India.Citi is <a href="https://www.bankingdive.com/news/citi-opening-charlotte-office-510-jobs-north-carolina/752586/">growing</a> its presence in Charlotte, North Carolina, with a new office that will bring 510 new jobs to the city’s expanding financial hub.Goldman Sachs&nbsp;is&nbsp;<a href="https://urldefense.com/v3/__https:/www.reuters.com/world/us/goldman-sachs-finances-270-million-affordable-housing-project-new-york-2025-07-15/__;!!O2kDR7mm-zSJ!o2fZGukag_0VEiQk546db3Cf93UnbYfJMExx4E2OkNiBYC1gabnWiVe1q2feEw_J2ApyotroaRbEZjA$">financing</a>&nbsp;a $270 million affordable housing project in the East New York neighborhood of Brooklyn—bringing 385 new apartments and a major boost to the community.JPMorganChase&nbsp;<a href="https://www.jpmorganchase.com/newsroom/press-releases/2025/jpmorganchase-18m-iff-chicago-midwest">announced</a>&nbsp;a $15 million loan and $3 million grant to the&nbsp;IFF&nbsp;to expand access to capital for nonprofits and power economic growth across Chicago and the Greater Midwest.In June, the&nbsp;<a href="https://linkprotect.cudasvc.com/url?a=https%3a%2f%2fbroadstreetimpact.com%2fabout%2fnews%2fnew-rural-investment-fund-is-leveraging-nmtcs-to-deploy-45-million-for-health-care-affordable-energy-and-quality-jobs&amp;c=E,1,eC5vf1M7tr9ek2rZGcQZ05eoWXZafXAl5rQnuBMj9wmaPiX-eMIUAyI_JKiqJBckeFzpJ7EzU3QKMOo-8IErYFDEPMrJNE1QXKtJv_nSt3Lkeiwmw3LCeb8,&amp;typo=1">Morgan Stanley Rural NMTC Fund</a>&nbsp;was announced to address persistent economic and health gaps in rural and tribal communities.&nbsp;Collaborating&nbsp;with Broadstreet Impact Services, the fund is leveraging federal New Markets Tax Credits (NMTCs) to invest $45 million in&nbsp;projects&nbsp;that&nbsp;deliver&nbsp;health care access, affordable and clean energy infrastructure, and living-wage job creation.State Street&nbsp;<a href="https://www.linkedin.com/posts/state-street_inclusiveeconomy-bostonxchange-activity-7351322745558704130-mtib/?utm_source=share&amp;utm_medium=member_desktop&amp;rcm=ACoAACmiWu4BwFZjjchdOS8BxnjLXmLgBgfAxCM">hosted</a>&nbsp;its first Boston XChange Demo Day, celebrating innovation with inspiring founders and a shared commitment to expanding economic opportunity in communities nationwide.Wells Fargo&nbsp;has been&nbsp;<a href="https://urldefense.com/v3/__https:/www.linkedin.com/posts/wellsfargo_wells-fargo-has-been-named-a-2025-celent-activity-7345481288998436864-4erb/?utm_source=share&amp;utm_medium=member_desktop&amp;rcm=ACoAACmiWu4BwFZjjchdOS8BxnjLXmLgBgfAxCM__;!!F9svGWnIaVPGSwU!obrX7uPkiHq9xzSv1NXycfi1h9Zpql_v1_8BulLS_Wz2owq8B1y6xtJnykhReT1qkWgAnK4ornxRDfCzQbTcLA$">named</a>&nbsp;a 2025 Celent Model Bank for transforming corporate digital banking through&nbsp;Wells Fargo&nbsp;Vantage℠, launched in 2022&nbsp;to meet the evolving digital needs of corporate and commercial clients.&nbsp;

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The Forum File, 2025 Edition #2

Dear reader,We’re back by popular demand—and just in time for a busy June in Washington. With longer days and growing policy momentum, there’s plenty to cover. In this issue, we highlight Wells Fargo’s new small business initiative, look at how changes to bank rules could help support the U.S. Treasury market and American economy, and share how Forum members are driving innovation, and community growth nationwide.Thanks for keeping up with us.Kevin Fromer, President and CEO, Financial Services Forum<h2>Penny For Your Thoughts</h2>Kimelyn Harris, head of Small Business Growth Philanthropy for Wells Fargo&nbsp;<h3>What is Wells Fargo’s Open for Business Growth program?</h3>This new $20 million Open for Business Growth program is designed to support the growth potential of small businesses in the “missing middle”– those that are in-between most capital solutions. During the pandemic, Wells Fargo created its Open for Business Fund, a $420 million national small business recovery effort. Through this fund, Wells Fargo collaborated with community organizations to benefit roughly 336,000 small businesses and enable them to keep or maintain 461,000 jobs nationwide. Open for Business Growth builds on that momentum and Wells Fargo’s focus on small business growth.<h3>What do small businesses need to be successful?</h3>Access to capital is the number one need we hear from small businesses. Often these businesses need a little bit more than a microloan but are not ready for traditional financing. Open for Business Growth allows our nonprofit grantees to develop products and services and coaching that embrace growth-stage small businesses so they can reach the next level of success.<h3>How will the Open for Business Growth program be deployed? Which cities?</h3>Our first grant recipient, Allies for Community Business, focuses on growing the construction industry around Chicago and helping businesses that have fluctuating revenue flow, like restaurants and retail. &nbsp;With grant funding, Allies for Community Business is deploying creative capital and flexible financing options that give businesses the leap they need to expand. We’re excited to announce grants in additional markets across the U.S. through end of the year.<h3>Can you explain more what you mean by “missing middle” for small businesses?</h3>Across the country, millions of small businesses serve as the backbone of America’s economy. They provide vital services and goods, as well as jobs for local communities. But there’s a “missing middle” of small businesses ready for expansion but not able to find the flexible capital solutions they need to grow. These small businesses are on the brink of expansion, poised to make an even greater impact in creating jobs, increasing services, and strengthening the economy. They need more than a microloan, but are not yet large enough for traditional financing.<h2>Value Add</h2>Supporting Small Businesses Recovering from the L.A. Wildfires&nbsp;&nbsp;<figure class="image image_resized" style="width:52.97%;"><img src="https://s205.q4cdn.com/885744627/files/doc_multimedia/2025/5/1009701913/HOPE_Inside_for_Small_Business-NR_Image810x450.jpg" alt="Wells Fargo Newsroom - Wells Fargo and Operation HOPE Introduce Free Financial Coaching to Small Businesses"></figure>Wells Fargo is working across the bank to support small business growth. Through Beyond Open for Business initiatives, Wells Fargo is expanding support services to include resources, knowledge and networking opportunities for businesses owners, which is also imperative to their growth.&nbsp; In the Greater Los Angeles area, many local businesses are trying to recover from the devastating wildfires. There Wells Fargo is collaborating with Operation HOPE to extend financial coaching services to small business owners at several Wells&nbsp;Fargo branches as part of the Project Restore HOPE Los Angeles initiative. The five-year effort helps those affected by wildfires with immediate and long-term financial recovery by helping them with FEMA applications, SBA loans, insurance claims, working with creditors, building a recovery budget, and much more. Additionally, Wells Fargo donated $2 million to local nonprofits to support ongoing relief efforts for small businesses and individuals.&nbsp;&nbsp;&nbsp;Wells Fargo believes philanthropy can be a catalyst for lasting impact and collaboration as key to moving the needle, listening to what communities need and co-designing with them. Small businesses are an important path to economic opportunity and wealth-building. Our country needs small businesses as a driver of the U.S economy.<h2>Capital Gains</h2>What we’re doing in WashingtonThe Forum continues to advocate for common sense policies that allow our members to best serve their customers and the U.S. economy. Recently, Forum President and CEO Kevin Fromer <a href="https://fsforum.com/news/forum-applauds-house-committee-passage-of-measures-to-improve-bank-supervision">issued</a> a statement after the House Financial Services Committee voted to advance measures to improve bank supervision. “The FIRM Act, the FAIR Exams Act, and the HUMPS Act represent important steps toward a supervisory system that is consistent and transparent,” Fromer said.Additionally, the Forum, along with fellow trade associations, <a href="https://fsforum.com/news/financial-associations-urge-federal-reserve-to-address-potential-uncertainty-caused-by-stress-capital-buffer-proposal-timing">urged</a> the Federal Reserve to take prompt, interim steps to clarify the 2025 stress test cycle to avoid unnecessary uncertainty.Finally, the Forum <a href="https://fsforum.com/news/forum-applauds-senate-committee-approval-of-governor-bowman-for-vice-chair-for-supervision">applauded</a> the Senate Banking Committee’s vote to advance Federal Reserve Governor Michelle Bowman for Federal Reserve Vice Chair for Supervision and urged swift Senate confirmation. “This role is critical to implementing appropriate regulation and effective supervision that promotes economic growth,” Fromer said.<h2>&nbsp;Our Two Cents</h2>Research from the ForumThe following chart shows how changing the Supplementary Leverage Ratio (SLR) could help large banks buy and hold more U.S. Treasuries. The chart compares the current capacity of the Forum members to hold Treasuries and the additional capacity that would be available under a more flexible standard.<figure class="image image_resized" style="width:62.29%;"><img src="https://fsforum.com/a/media/ff-chart-6.5.png"></figure>In the latest edition of the BankNotes Blog, Forum Chief Economist Sean Campbell <a href="https://fsforum.com/news/correcting-the-record-on-leverage-reform-leverage-requirements-are-already-backfiring">addresses</a> key misrepresentations about leverage capital requirements and discusses why the economy needs change. "Outmoded and arbitrary leverage capital regulations have been backfiring on the U.S. economy for years and are in serious need of reform," said Dr. Campbell.<h2>Checking the Balance</h2>Members in the newsBank of America <a href="https://newsroom.bankofamerica.com/content/newsroom/press-releases/2025/05/bofa-to-open-150-financial-centers-by-2027--investing-over--5-bi.html">announced</a> plans to open over 150 financial centers across 60 markets by the end of 2027, expanding access to banking services nationwide.BNY <a href="https://www.bny.com/corporate/global/en/about-us/newsroom/press-release/bny-expands-digital-asset-platform-with-launch-of-innovative-on-chain-offering.html">expanded</a> its digital asset platform offering&nbsp; with a new data insights product that securely and efficiently deliver both on- and off-chain data across blockchain networks.Citi <a href="https://www.citigroup.com/global/news/perspective/2025/20-years-global-community-day">celebrated</a> the 20th anniversary of Global Community Day, its annual tradition of global volunteerism and community impact.In April, Goldman Sachs 10,000 Small Businesses&nbsp;announced its 1,000th <a href="https://www.goldmansachs.com/pressroom/press-releases/2025/10ksb-announces-thousandth-graduate-in-salt-lake-city-and-launches-new-program-across-utah">graduate&nbsp;</a>in Salt Lake City, as the firm celebrates 25 years in the city. Goldman Sachs 10,000 Small Businesses also opened applications across Utah as part of its $100 million Investment in Rural Communities, an initiative that launched in 2023 and equips rural entrepreneurs with results-oriented training to help grow their businesses and expand access to capital and to personalized support services.&nbsp;JPMorganChase <a href="https://www.jpmorganchase.com/newsroom/press-releases/2025/workplace-public-benefits-commitment-LMI-consumers">committed</a> $14.5 million in philanthropic funding to improve access to&nbsp;workplace and public benefits&nbsp;for low- to moderate-income individuals.Morgan Stanley&nbsp;<a href="https://www.morganstanley.com/articles/supporting-childrens-mental-health?cid=SM_CORP_TWITTER_MorganStanley_20250408&amp;linkId=793617378">celebrated</a>&nbsp;the 5th anniversary of its&nbsp;Alliance for Children’s Mental Health, reaffirming its $50 million commitment to&nbsp;youth mental health solutions by making&nbsp;multi-year grants to nonprofit members and expanding its&nbsp;<a href="https://www.morganstanley.com/press-releases/children-s-mental-health-innovation-awards-2025">Innovation Awards</a>&nbsp;program to include younger leaders.State Street <a href="https://www.statestreet.com/us/en/asset-manager/insights/market-outlook-2025-second-quarter">highlighted</a> key insights into evolving market dynamics and shared its outlook for the second quarter of 2025.&nbsp;&nbsp;Wells Fargo <a href="https://newsroom.wf.com/news-releases/news-details/2025/Wells-Fargo-and-Operation-HOPE-Introduce-Free-Financial-Coaching-to-Small-Businesses/default.aspx">partnered</a> with Operation HOPE to expand access to financial education workshops and personalized coaching for small business owners.&nbsp;

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The Forum File, 2025 Edition #1

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

The Forum File

CONTACT: Laura Peavey(202) 457-8770lpeavey@fsforum.com&nbsp;ICYMI: Support for Bank Capital Requirement Reform Continues to Build&nbsp;Washington, D.C. – The Federal Reserve’s conference on bank capital requirements highlighted the growing support for modernizing capital rules for the largest U.S. banks. Industry and policy experts provided their perspectives on the effectiveness of the overall capital framework and potential reforms to support U.S. economic growth and stability.&nbsp;“America’s largest banks are pillars of strength and stability for the U.S. financial system. However, current capital requirements are hindering their ability to support families, small businesses, and American competitiveness. Today’s conference was an important step toward identifying reforms that will ensure the capital framework functions as intended—preserving resilience while driving growth. Forum members are committed to continuing to work with policymakers and regulators to achieve our shared goal of a thriving U.S. economy,” said Forum President and CEO Kevin Fromer.Read highlights from today’s conference:Tiffany Eng, BNY, on current leverage ratio requirements, highlighting the need for reform: "So banks’ ability to act as a shock absorber for both cash and Treasury securities can be constrained by leverage ratios as they're constructed today.”Hal Scott, Harvard University, on the financial regulators’ proposal to reform the leverage ratio: “This proposal does not reduce risk-based capital. It merely moves leverage into the background where it always has belonged.”Mike Mayo, Wells Fargo, on the importance of simplifying requirements: “The system today, it's too confusing, too constraining, and too costly. So, let's make them simpler and strong. … There's too many targets. It's acronym soup and too much capital volatility.”Randal Quarles, Cynosure Group, on the consequences of driving activities outside of the banking system: “If we adopt regulations that are going to push something out of the banking system ... we will push it into either parts of the financial system that are less transparent and less well capitalized or jurisdictions that are less transparent.”Sheara Fredman, Goldman Sachs, explains the impact of rising capital requirements: “Whether it's the stress test, or Basel III Endgame, or GSIB, that to the extent that you're increasing the capital requirements on particular products for the most highly regulated banks, that activity will go somewhere and it will go out to the less transparent, outside of the banking system.”Steven Chubak, Wolfe Research, on the unintended consequences of imposing higher capital requirements: “It causes a pullback in lending. It limits credit availability, but especially to low-end consumers. It also drives much more activity outside the regulated perimeter.”Al Moffitt, JPMorgan, discusses the importance of appropriately calibrating the U.S. GSIB surcharge: “So, the calibration must, and I say must, reflect the totality of all regulations to ensure it's fit for purpose if we look at everything and make sure the cost of low-risk activities are appropriately calibrated.”Sharon Yeshaya, Morgan Stanley, sums up the need for a holistic review of capital requirements: “It feels like an old New York City apartment that they just keep painting over and over and over again. … So, I think that we should strip the paint and we should take a look and say, what are we trying to achieve?”Alastair Borthwick, Bank of America, stresses the need for regulators to review how overlapping capital rules affect the economy: “It's the sort of thing that has a real Main Street impact.”###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>&nbsp;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>

ICYMI: Support for Bank Capital Requirement Reform Continues to Build

CONTACT: Laura Peavey(202) 457-8770lpeavey@fsforum.comFinancial Services Forum Congratulates Jonathan Gould on Confirmation as Comptroller of the CurrencyWashington D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today after the Senate confirmed Jonathan Gould as the Comptroller of the Currency:“The Forum congratulates Jonathan Gould on his confirmation to lead the Office of the Comptroller of the Currency (OCC). Mr. Gould’s experience and leadership in the financial sector, including his role as Senior Deputy Comptroller and Chief Counsel at the OCC, will be instrumental in maintaining the safety and soundness of our banking system. The Forum commends President Trump and the Senate for their action to fill this important position.“Forum members, America’s largest and most diversified financial institutions, are integral to supporting economic growth, fostering financial stability, and providing critical banking services to customers across the country. The Forum looks forward to working with Comptroller Gould and his team to advance policies that support consumers, businesses of all sizes, and America’s communities.”###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.&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:&nbsp;<a href="http://www.fsforum.com/">fsforum.com</a>Follow us on X&nbsp;<a href="https://twitter.com/fsforum">@fsforum</a>&nbsp;and&nbsp;<a href="https://www.linkedin.com/company/financial-services-forum/">LinkedIn</a>

Financial Services Forum Congratulates Jonathan Gould on Confirmation as Comptroller of the Currency

Contact: Laura Peavey&nbsp;&nbsp;(202) 457-8770&nbsp;lpeavey@fsforum.comForum Welcomes Proposal to Refine Large Bank Supervisory Ratings“Reforms will not only strengthen the oversight of large financial institutions, but also promote greater confidence among investors, consumers, and the broader economy.”Washington D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today after the Federal Reserve Board issued a proposal to refine the Large Financial Institution rating system:"This is a welcome development to help focus supervision on material, financial risks and create a better balance with the assessment of overall large bank management.“Supervisory ratings for the largest banks should better reflect the quality of their capital and liquidity, as those measures are key to the strength and resilience of these institutions. We commend the Federal Reserve for its commitment to improving the supervisory landscape and for recognizing the importance of a properly focused and balanced rating system. Reforms will not only strengthen the oversight of large financial institutions, but also promote greater confidence among investors, consumers, and the broader economy.“We look forward to reviewing the proposal in detail and providing our comments.”###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.&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:&nbsp;<a href="http://www.fsforum.com/">fsforum.com</a>Follow us on X&nbsp;<a href="https://twitter.com/fsforum">@fsforum</a>&nbsp;and&nbsp;<a href="https://www.linkedin.com/company/financial-services-forum/">LinkedIn</a>&nbsp;

Forum Welcomes Proposal to Refine Large Bank Supervisory Ratings

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Kevin Fromer

President and Chief Executive Officer

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

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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 

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

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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

Joint Trades Letter on Stress Capital Buffer Requirements

Joint Trades Letter on Stress Capital Buffer Proposal 

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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

Joint Trades Letter to PWG on Digital Assets Next Steps Recommendations

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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 Reform for the Largest U.S. Banks

Capital and the U.S. Economy

Buybacks and Dividends - Supporting the Economy 

Fact Sheets

Research

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The Forum supports a review of the GSIB surcharge, a capital requirement that was agreed to internationally, but that U.S. regulators have implemented in a manner that places higher requirements on U.S. banks than that required of foreign competitors. 

Federal regulators have failed to review and adjust the calculation of the surcharge to reflect the inflationary effects of overall economic growth, as they indicated it would when the GSIB surcharge rule was enacted in 2015. Since that time, the surcharges for U.S. GSIBs have increased in large part due to economic growth and inflation, which in no way suggests heightened systemic risk.


GSIB Surcharge 

GSIB White Paper: The Rising Tide of Safe Assets and Large Bank Capital Requirements

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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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Ronald O'Hanley

State Street Corporation Chairman And Chief Executive Officer

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Wells Fargo & Company

Charles W. Scharf is chief executive officer and president, and a member of the Board of Directors of Wells Fargo &amp; Company. A financial services veteran with 24 years of experience in leadership roles in the banking and payments industries, Charlie served as chief executive officer of Bank of New York Mellon from July 2017 to October 2019 and the chairman of its board from January 2018 to October 2018. He also was chief executive officer and a director of Visa Inc. from October 2012 to December 2016. During his tenure at Bank of New York Mellon, Charlie demonstrated a strong track record in initiating and leading change, driving results, strengthening operational risk and compliance, and innovating amid a rapidly evolving digital landscape. As the CEO of Visa, Charlie transformed the firm into a technology-driven digital commerce company by partnering with the world’s leading technology companies to drive new payment experiences and introduce new technologies to improve payment system security. Previously, he was a managing director of One Equity Partners at JPMorgan Chase &amp; Co. and chief executive officer of Retail Financial Services at JPMorgan Chase. He also was chief executive officer of the retail division of Bank One Corp., chief financial officer of Bank One Corp., chief financial officer of the Global Corporate and Investment Bank division of Citigroup, and chief financial officer of Salomon Smith Barney and its predecessor company. Charlie earned a Bachelor of Arts degree from Johns Hopkins University and an MBA from New York University. He is a director of Microsoft Corporation, serves on the board of trustees of Johns Hopkins University, is a member of The Business Council, and is chairman of the New York City Ballet. He lives in New York City.&nbsp;

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