Joint Comments on Modifications to the Capital Plan Rule and Stress Capital Buffer Requirement

Dear Ms. Misback:

The Financial Services Forum, American Bankers Association, Bank Policy Institute, and Securities Industry and Financial Markets Association (together, the "Associations") appreciate this opportunity to submit this letter to the Federal Reserve Board (the "FRB") on its proposed rule (the "Proposal") to amend the calculation and annual effective date of the stress capital buffer ("SCB") requirement. The Proposal is of significant importance to those of our member institutions that are subject to supervisory stress tests and the SCB requirement and we appreciate the FRB's efforts to reduce volatility of SCB requirements through the Proposal.

We are submitting this letter well in advance of the Proposal's comment deadline to highlight the uncertainty the Proposal creates regarding SCB requirements resulting from the current stress test cycle. We urge the FRB to publicly address this issue as soon as possible (and no later than 14 calendar days before the scheduled date for the announcement of 2025 stress testing results).

As detailed below, the end of the Proposal's comment period on June 23, 2025 is one week prior to when the FRB must notify firms of their preliminary SCB requirement (unless otherwise determined by the FRB), after which notification firms have two business days to adjust their planned capital distributions. Presumably, this preliminary SCB requirement would be based on the current rule's calculation methodology. If amendments to the SCB requirement methodology become effective after June 30, 2025, when the FRB is required to provide firms with their preliminary SCB requirement, and prior to the effective date of the upcoming SCB requirement (October 1, 2025), a firm's final SCB requirement (potentially based on a new methodology) could be materially different than its preliminary amount. A similar problem would arise if the FRB adopts a final rule with an effective date after October 1, 2025 but before October 1, 2026, as the uncertainty of a potential change in the SCB's mechanics makes it unclear whether firms' June 2025 decision-making should assume a one-year continuation of the current SCB requirement framework or should instead assume adoption of the Proposal as a final rule. Thus, the FRB cannot accurately convey a firm's SCB requirement, and a firm cannot accurately disclose its SCB requirement and reasonably adjust its capital distributions, if firms do not have certainty that they can assume the current SCB requirement methodology will remain an available methodology for the full twelve-month period beginning October 1, 2025, regardless of whether the FRB does or does not adopt the Proposal as a final rule.

To avoid introducing additional uncertainty regarding the SCB requirement, which would be inconsistent with the Proposal's stated purpose, we urge that the FRB, no later than 14 calendar days before the scheduled date for the announcement of 2025 stress testing results, publicly announce that firms will be permitted to operate under the existing SCB framework through September 30, 2026, regardless of whether the FRB adopts revised SCB mechanics in a final rule with an effective date in that window.

Download the joint comment letter to read the full text.