May 16, 2025

VIA ELECTRONIC SUBMISSION
Ann Misback, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue NW
Washington, DC 20551

Re: Modifications to the Capital Plan Rule and Stress Capital Buffer Requirement (Docket R-1866 and RIN 7100-AG92)

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.¹ 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.²

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.³ 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).⁴

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. This approach would provide the FRB with flexibility to adopt the Proposal as a final rule in an orderly manner at a future date while providing firms and investors with confidence that, at a minimum, the existing SCB methodology will remain an available methodology through September 30, 2026.

I. The Proposal increases uncertainty around firms’ 2025 SCBs.

Under the current SCB rule, a firm’s SCB requirement is determined based on its stress capital decline under the severely adverse scenario in the supervisory stress test for a given year and a dividend add-on component, which is comprised of four quarters of the firm’s planned dividend payments (corresponding to the fourth through seventh quarters of the supervisory stress test planning horizon).⁵ The FRB is required to notify firms of its preliminary calculation of a firm’s SCB requirement along with an explanation of the results of the supervisory stress test by June 30 of each year (unless otherwise determined by the FRB).⁶

1. Modifications to the Capital Plan Rule and Stress Capital Buffer Requirement, 90 Fed. Reg. 16843 (Apr. 22, 2025). [↩]
2. A description of the associations is included in the Annex to this letter. [↩]
3. This letter focuses on the uncertainty the Proposal introduces for the current stress testing cycle. The Associations expect to submit additional letters discussing their views on the Proposal more broadly prior to the end of the comment period. [↩]
4. This 14-calendar day period coincides with when the FRB is required to notify banking organizations prior to publicly releasing stress testing results. 12 CFR 252.46(b)(2). [↩]
5. 12 CFR 225.8(f)(2). [↩]
6. 12 CFR 225.8(h)(1). [↩]