Warren, Kim, Blunt Rochester Call for Fed Vice Chair to Oppose European Bank Giveaway that Threatens Global Financial Stability and Creates An Uneven Playing Field

Warren, Kim, Blunt Rochester Call for Fed Vice Chair to Oppose European Bank Giveaway that Threatens Global Financial Stability and Creates An Uneven Playing Field

"We write to request that you…represent the interests of the United States and block the forthcoming renewal of the unfair treatment of systemically important European banks."

Text of Letter (PDF)

Washington, D.C. - U.S. Senators Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, Andy Kim (D-NJ), and Lisa Blunt Rochester (D-DE) sent a letter to Michelle Bowman, Federal Reserve Vice Chair for Supervision and Chair of the Financial Stability Board's (FSB) Standing Committee on Supervisory and Regulatory Cooperation, calling for her to oppose the FSB's special treatment of European global systemically important banks (GSIBs) banks when calculating their systemic risk scores. The scores determine how much additional loss-absorbing capital these big banks must fund themselves with to limit their likelihood of failure. The FSB's Basel Committee on Banking Supervision has produced systemic risk scores for GSIBs since the 2008 financial crisis to promote the stability of the global financial system.

"In 2022, the Basel Committee announced that European GSIBs would receive special treatment when calculating the international activity portion of the methodology," wrote the Banking Committee members. "Instead of accounting for bank loans and other financial exposures between European countries as international activity, European GSIBs were allowed to treat two-thirds of these exposures as merely domestic activity. Relaxing this requirement reduces the systemic risk score for European GSIBs."

The Senators critiqued the Basel Committee's decision to increase the risks posed by European banks without a public comment process: "Europe does not yet have a unified deposit insurance framework, nor a mechanism to provide liquidity in periods of banking stress. In addition, this change was executed behind closed doors in violation of the Basel Committee's charter, which commits to seeking input 'from all relevant stakeholders on policy proposals' by 'issuing a public invitation to interested parties to provide comments in writing.'"

The Senators continued: "In November, the FSB will decide whether or not to renew this special treatment for another year. As the Chair of the FSB's Standing Committee on Supervisory and Regulatory Cooperation, which will consider the renewal before it is referred to the entire FSB Plenary, we request that you promote both global financial stability and a level playing field for U.S. banks."

The Senators concluded by calling for answers to their questions by November 14, 2025 on the justification for giving European GSIBs preferential treatment and making such a change without the public comment process.

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