Financial Services Forum Examines Regulatory Efforts to Address Too-Big-to-Fail

1 Jul 2019

Trade Group Highlights Strength and Progress of Large U.S. Financial Institutions

CONTACT: Julia Lawless
(202) 457-8766

WASHINGTON, DC – The post-crisis regulatory reforms implemented to address too big to fail in the United States have been successful in addressing systemic and moral hazard risks and policymakers should continue to work to improve efficiency, promote economic growth, and create level playing fields within the global financial system, said the Financial Services Forum today.

The comments came in response to a request for stakeholder feedback from the Financial Stability Board (FSB), which is currently evaluating the effects of reforms that were agreed by the G-20 following the global financial crisis.

U.S. regulators and Forum member institutions have served as a model for the rest of the world, leading the charge in adopting and implementing the post-crisis financial reforms that reflect the goals and objectives of the G-20,” said Forum President and CEO Kevin Fromer. “The Financial Stability Board is rightly reexamining the impact of these regulations and has a real opportunity to improve efficiency in a way that will foster growth without undermining the significant progress that has been made over the past decade.”

The Forum’s letter offered observations and recommendations with respect to a number of reforms, including:

  • U.S. reforms have been successful. Improvements in the quantity and quality of bank capital and liquidity now provide a significant safeguard against financial distress. Improvements to funding stability also have increased the resiliency of U.S. global systemically important banks (GSIBs). In addition, U.S. GSIBs are at the forefront globally in resolution planning. Market reforms have also reduced materially systemic risk and improved the stability of U.S. financial markets.
  • Policymakers should streamline regulatory reforms to reduce complexity and avoid unintended consequences. Today, some requirements are mis-calibrated, overlap, and yield unintended consequences, such as decreased liquidity and the movement of financial intermediation outside of the regulatory perimeter. Regulators should refine these requirements to better promote growth, eliminate inefficiencies, and avoid duplication.
  • The FSB should lead the way in facilitating international coordination. Improved international coordination will support the successful and cost-effective resolution of a large, international banking organization, avoid inefficiency in reform efforts, and create a level international playing field for banks with cross-border operations.

A copy of the letter, which was submitted to the FSB on June 28, can be found here.

###

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

Visit our website: fsforum.com

Follow us on Twitter @fsforum and LinkedIn