Joint Trades Letter on the Capital Requirements Applicable to Category I and II Firms

Ladies and Gentlemen:

The Bank Policy Institute, the American Bankers Association, the Financial Services Forum, the U.S. Chamber of Commerce, and the Consumer Bankers Association submit this letter in response to the joint notice of proposed rulemaking issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency that would amend the capital requirements mandatorily applicable to Category I and II firms and revise the market risk capital framework applicable to firms with significant trading activity.

We appreciate the agencies' intent to calibrate the proposal considering the interplay with other aspects of the capital framework. As described in the proposal, the agencies considered the calibration of the entire capital framework, particularly the relationship between the proposed capital rules and stress testing framework, in assessing the impact of the proposal. However, the agencies' calibration approach does not fully eliminate the overlap between certain aspects of the capital framework, which results in over-capitalization for operational, market, and credit valuation adjustment ("CVA") risks. The agencies should make further revisions to properly calibrate all aspects of the capital framework. This letter contains some recommendations for how to do so, and our February 20, 2026 letter in response to the Federal Reserve’s October 2025 stress testing transparency and accountability proposal (the "Stress Test Letter") does as well.

We also support the agencies' goals of improving the risk sensitivity and consistency of the capital framework and simplifying its design. This letter contains recommendations aimed at further improving the calibration and risk sensitivity of the proposed expanded risk-based approach, as well as recommendations for how the proposal could be revised to reduce unnecessary operational burden on firms.

Download the joint comment letter to read the full text.