Janet Yellen: Financial stability a decade after the onset of the crisis
Speech by Ms Janet L Yellen, Chair of the Board of Governors of the Federal Reserve
System, at the Federal Reserve Bank of Kansas City Economic Symposium "Fostering a
Dynamic Global Recovery", Jackson Hole, Wyoming, 25 August 2017.
* * *
A decade has passed since the beginnings of a global financial crisis that resulted in the most
severe financial panic and largest contraction in economic activity in the United States since the
Great Depression. Already, for some, memories of this experience may be fading-memories of
just how costly the financial crisis was and of why certain steps were taken in response. Today I
will look back at the crisis and discuss the reforms policymakers in the United States and around
the world have made to improve financial regulation to limit both the probability and the adverse
consequences of future financial crises.
A resilient financial system is critical to a dynamic global economy-the subject of this
conference. A well-functioning financial system facilitates productive investment and new
business formation and helps new and existing businesses weather the ups and downs of the
business cycle. Prudent borrowing enables households to improve their standard of living by
purchasing a home, investing in education, or starting a business. Because of the reforms that
strengthened our financial system, and with support from monetary and other policies, credit is
available on good terms, and lending has advanced broadly in line with economic activity in
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recent years, contributing to today's strong economy.
At the same time, reforms have boosted the resilience of the financial system. Banks are safer.
The risk of runs owing to maturity transformation is reduced. Efforts to enhance the resolvability
of systemic firms have promoted market discipline and reduced the problem of too-big-to-fail.
And a system is in place to more effectively monitor and address risks that arise outside the
regulatory perimeter.
Nonetheless, the scope and complexity of financial regulatory reforms demand that policymakers
and researchers remain alert to both areas for improvement and unexpected side effects. The
Federal Reserve is committed to continuing to evaluate the effects of regulation on financial
stability and on the broader economy and to making appropriate adjustments.
I will start by reviewing where we were 10 years ago. I will then walk through some key reforms
our country has put in place to diminish the chances of another severe crisis and limit damage
during times of financial instability. After reviewing these steps, I will summarize indicators and
research that show the improved resilience of the U.S. financial system-resilience that is due
importantly to regulatory reform as well as actions taken by the private sector. I will then turn to
the evidence regarding how financial regulatory reform has affected economic growth, credit
availability, and market liquidity.
Developments 10 years ago
The U.S. and global financial system was in a dangerous place 10 years ago. U.S. house prices
had peaked in 2006, and strains in the subprime mortgage market grew acute over the first half
2
of 2007. By August, liquidity in money markets had deteriorated enough to require the Federal
3
Reserve to take steps to support it. And yet the discussion here at Jackson Hole in August
2007, with a few notable exceptions, was fairly optimistic about the possible economic fallout
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from the stresses apparent in the financial system.
As we now know, the deterioration of liquidity and solvency within the financial sector continued
over the next 13 months. Accumulating strains across the financial system, including the
collapse of Bear Stearns in March 2008, made it clear that vulnerabilities had risen across the
system. As a result, policymakers took extraordinary measures: The Federal Open Market
Committee (FOMC) sharply cut the federal funds rate, and the Federal Reserve, in coordination
with the Treasury Department and other agencies, extended liquidity facilities beyond the
traditional banking sector, applying to the modern structure of U.S. money markets the dictum of
Walter Bagehot, conceived in the 19th century, to lend freely against good collateral at a penalty
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rate. Still, the deterioration in the financial sector continued, with Fannie Mae and Freddie Mac
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failing in early September.
But the deterioration from early 2007 until early September 2008 already the worst financial
disruption in the United States in many decades was a slow trickle compared with the tidal wave
that nearly wiped out the financial sector that September and led to a plunge in economic activity
in the following months. Not long after Fannie and Freddie were placed in government
conservatorship, Lehman Brothers collapsed, setting off a week in which American International
Group, Inc. (AIG), came to the brink of failure and required large loans from the Federal Reserve
to mitigate the systemic fallout; a large money market fund "broke the buck" (that is, was unable
to maintain a net asset value of $1 per share) and runs on other money funds accelerated,
requiring the Treasury to provide a guarantee of money fund liabilities; global dollar funding
markets nearly collapsed, necessitating coordinated action by central banks around the world;
the two remaining large investment banks became bank holding companies, thereby ending the
era of large independent investment banks in the United States; and the Treasury proposed a
rescue of the financial sector. Within several weeks, the Congress passed-and President Bush
signed into law-the Emergency Economic Stabilization Act of 2008, which established the $700
billion Troubled Asset Relief Program; the Federal Reserve initiated further emergency lending
programs; and the Federal Deposit Insurance Corporation (FDIC) guaranteed a broad range of
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bank debt. Facing similar challenges in their own jurisdictions, many foreign governments also
undertook aggressive measures to support the functioning of credit markets, including
largescale capital injections into banks, expansions of deposit insurance programs, and guarantees of
some forms of bank debt.
Despite the forceful policy responses by the Treasury, the Congress, the FDIC, and the Federal
Reserve as well as authorities abroad, the crisis continued to intensify: The vulnerabilities in the
U.S. and global economies had grown too large, and the subsequent damage was enormous.
From the beginning of 2008 to early 2010, nearly 9 million jobs, on net, were lost in the United
States. Millions of Americans lost their homes. And distress was not limited to the U.S. economy:
Global trade and economic activity contracted to a degree that had not been seen since the
1930s. The economic recovery that followed, despite extraordinary policy actions, was painfully
slow.
What the crisis revealed and how policymakers have responded
These painful events renewed efforts to guard against financial instability. The Congress, the
Administration, and regulatory agencies implemented new laws, regulations, and supervisory
practices to limit the risk of another crisis, in coordination with policymakers around the world.
The vulnerabilities within the financial system in the mid-2000s were numerous and, in hindsight,
familiar from past financial panics. Financial institutions had assumed too much risk, especially
related to the housing market, through mortgage lending standards that were far too lax and
contributed to substantial overborrowing. Repeating a familiar pattern, the "madness of crowds"
had contributed to a bubble, in which investors and households expected rapid appreciation in
house prices. The long period of economic stability beginning in the 1980s had led to
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complacency about potential risks, and the buildup of risk was not widely recognized. As a
result, market and supervisory discipline was lacking, and financial institutions were allowed to
take on high levels of leverage. This leverage was facilitated by short-term wholesale borrowing,
owing in part to market-based vehicles, such as money market mutual funds and asset-backed
commercial paper programs that allowed the rapid expansion of liquidity transformation outside
of the regulated depository sector. Finally, a self-reinforcing loop developed, in which all of the
factors I have just cited intensified as investors sought ways to gain exposure to the rising prices
of assets linked to housing and the financial sector. As a result, securitization and the
development of complex derivatives products distributed risk across institutions in ways that
were opaque and ultimately destabilizing.
In response, policymakers around the world have put in place measures to limit a future buildup
of similar vulnerabilities. The United States, through coordinated regulatory action and legislation,
moved very rapidly to begin reforming our financial system, and the speed with which our
banking system returned to health provides evidence of the effectiveness of that strategy.
Moreover, U.S. leadership of global efforts through bodies such as the Basel Committee on
Banking Supervision, the Financial Stability Board (FSB), and the Group of Twenty has
contributed to the development of standards that promote financial stability around the world,
thereby supporting global growth while protecting the U.S. financial system from adverse
developments abroad. Preeminent among these domestic and global efforts have been steps to
increase the loss-absorbing capacity of banks, regulations to limit both maturity transformation in
short-term funding markets and liquidity mismatches within banks, and new authorities to
facilitate the resolution of large financial institutions and to subject systemically important firms to
more stringent prudential regulation.
Several important reforms have increased the loss-absorbing capacity of global banks. First, the
quantity and quality of capital required relative to risk-weighted assets have been increased
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substantially. In addition, a simple leverage ratio provides a backstop, reflecting the lesson
imparted by past crises that risk weights are imperfect and a minimum amount of equity capital
should fund a firm's total assets. Moreover, both the risk-weighted and simple leverage
requirements are higher for the largest, most systemic firms, which lowers the risk of distress at
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such firms and encourages them to limit activities that could threaten financial stability. Finally,
the largest U.S. banks participate in the annual Comprehensive Capital Analysis and Review
(CCAR) the stress tests. In addition to contributing to greater loss-absorbing capacity, the
CCAR improves public understanding of risks at large banking firms, provides a forward-looking
examination of firms' potential losses during severely adverse economic conditions, and has
contributed to significant improvements in risk management.
Reforms have also addressed the risks associated with maturity transformation. The fragility
created by deposit-like liabilities outside the traditional banking sector has been mitigated by
regulations promulgated by the Securities and Exchange Commission affecting prime
institutional money market funds. These rules require these prime funds to use a floating net
asset value, among other changes, a shift that has made these funds less attractive as
cashmanagement vehicles. The changes at money funds have also helped reduce banks' reliance on
unsecured short-term wholesale funding, since prime institutional funds were significant
investors in those bank liabilities. Liquidity risk at large banks has been further mitigated by a new
liquidity coverage ratio and a capital surcharge for global systemically important banks (G-SIBs).
The liquidity coverage ratio requires that banks hold liquid assets to cover potential net cash
outflows over a 30-day stress period. The capital surcharge for U.S. G-SIBs links the required
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level of capital for the largest banks to their reliance on short-term wholesale funding.
While improvements in capital and liquidity regulation will limit the reemergence of the risks that
grew substantially in the mid-2000s, the failure of Lehman Brothers demonstrated how the
absence of an adequate resolution process for dealing with a failing systemic firm left
policymakers with only the terrible choices of a bailout or allowing a destabilizing collapse. In
recognition of this shortcoming, the Congress adopted the orderly liquidation authority in Title II of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to provide
an alternative resolution mechanism for systemically important firms to be used instead of
bankruptcy proceedings when necessary to preserve financial stability. The orderly liquidation
authority contains a number of tools, including liquidity resources and temporary stays on the
termination of financial contracts, that would help protect the financial system and economy from
the severe adverse spillovers that could occur if a systemic firm failed. Importantly, any losses
incurred by the government in an Orderly Liquidation Authority resolution would not be at the
expense of taxpayers, since the statute provides that all such losses must be borne by other
large financial firms through subsequent assessments. In addition, the Congress required that
the largest banks submit living wills that describe how they could be resolved under
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bankruptcy. And the Federal Reserve has mandated that systemically important banks meet
total loss-absorbing capacity requirements, which require these firms to maintain long-term debt
adequate to absorb losses and recapitalize the firm in resolution. These enhancements in
resolvability protect financial stability and help ensure that the shareholders and creditors of
failing firms bear losses. Moreover, these steps promote market discipline, as creditors-
knowing full well that they will bear losses in the event of distress-demand prudent risk-taking,
thereby limiting the problem of too-big-to-fail.
Financial stability risks can also grow large outside the regulated banking sector, as amply
demonstrated by the events of 2007 and 2008. In response, a number of regulatory changes
affecting what is commonly referred to as the shadow banking sector have been instituted. A
specific example of such risks, illustrative of broader developments, was the buildup of large
counterparty exposures through derivatives between market participants and AIG that were both
inappropriately risk-managed and opaque. To mitigate the potential for such risks to arise again,
new standards require central clearing of standardized over-the-counter derivatives, enhanced
reporting requirements for all derivatives, and higher capital as well as margin requirements for
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noncentrally cleared derivatives transactions.
Another important step was the Congress's creation of the Financial Stability Oversight Council
(FSOC). The council is responsible for identifying risks to financial stability and for designating
those financial institutions that are systemically important and thus subject to prudential
regulation by the Federal Reserve. Both of these responsibilities are important to help guard
against the risk that vulnerabilities outside the existing regulatory perimeter grow to levels that
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jeopardize financial stability.
The financial system is safer
The evidence shows that reforms since the crisis have made the financial system substantially
safer. Loss-absorbing capacity among the largest banks is significantly higher, with Tier 1
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common equity capital more than doubling from early 2009 to now. The annual stress-testing
exercises in recent years have led to improvements in the capital positions and
riskmanagement processes among participating banks. Large banks have cut their reliance on
short-term wholesale funding essentially in half and hold significantly more high-quality, liquid
assets. Assets under management at prime institutional money market funds that proved
susceptible to runs in the crisis have decreased substantially. And the ability of regulators to
resolve a large institution has improved, reflecting both new authorities and tangible steps taken
by institutions to adjust their organizational and capital structure in a manner that enhances their
resolvability and significantly reduces the problem of too-big-to-fail.
The progress evident in regulatory and supervisory metrics has been accompanied by shifts in
private-sector assessments that also suggest enhanced financial stability. Investors have
recognized the progress achieved toward ending too-big-to-fail, and several rating agencies have
removed the government support rating uplift that they once accorded to the largest banks.
Credit default swaps for the large banks also suggest that market participants assign a low
probability to the distress of a large U.S. banking firm. Market-based assessments of the
lossabsorbing capacity of large U.S. banks have moved up in recent years, and market-based
measures of equity now lie in the range of book estimates of equity. To be sure, market-based
measures may not reflect true risks-they certainly did not in the mid-2000s-and hence the
observed improvements should not be overemphasized. But supervisory metrics are not
perfect, either, and policymakers and investors should continue to monitor a range of supervisory
and market-based indicators of financial system resilience.
Economic research provides further support for the notion that reforms have made the system
safer. Studies have demonstrated that higher levels of bank capital mitigate the risk and adverse
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effects of financial crises. Moreover, researchers have highlighted how liquidity regulation
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supports financial stability by complementing capital regulation. Economic models of the
resilience of the financial sector-so called top-down stress-testing models-reinforce the
message from supervisory stress tests that the riskiness of large banks has diminished over the
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past decade. Similarly, model-based analyses indicate that the risk of adverse fire sale
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spillovers across banks or broker-dealers have been substantially mitigated.
Is this safer system supporting growth?
I suspect many in this audience would agree with the narrative of my remarks so far: The events
of the crisis demanded action, needed reforms were implemented, and these reforms have
made the system safer. Now-a decade from the onset of the crisis and nearly seven years
since the passage of the Dodd-Frank Act and international agreement on the key banking
reforms-a new question is being asked: Have reforms gone too far, resulting in a financial
system that is too burdened to support prudent risk-taking and economic growth?
The Federal Reserve is committed individually, and in coordination with other U.S. government
agencies through forums such as the FSOC and internationally through bodies such as the
Basel Committee on Banking Supervision and the FSB, to evaluating the effects of financial
market regulations and considering appropriate adjustments. Furthermore, the Federal Reserve
has independently taken steps to evaluate potential adjustments to its regulatory and supervisory
practices. For example, the Federal Reserve initiated a review of its stress tests following the
2015 cycle, and this review suggested changes to reduce the burden on participating institutions,
especially smaller institutions, and to better align the supervisory stress tests with regulatory
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capital requirements. In addition, a broader set of changes to the new financial regulatory
framework may deserve consideration. Such changes include adjustments that may simplify
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regulations applying to small and medium-sized banks and enhance resolution planning.
More broadly, we continue to monitor economic conditions, and to review and conduct research,
to better understand the effect of regulatory reforms and possible implications for regulation. I will
briefly summarize the current state of play in two areas: the effect of regulation on credit
availability and on changes in market liquidity.
The effects of capital regulation on credit availability have been investigated extensively. Some
studies suggest that higher capital weighs on banks' lending, while others suggest that higher
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capital supports lending. Such conflicting results in academic research are not altogether
surprising. It is difficult to identify the effects of regulatory capital requirements on lending
because material changes to capital requirements are rare and are often precipitated, as in the
recent case, by financial crises that also have large effects on lending.
Given the uncertainty regarding the effect of capital regulation on lending, rulemakings of the
Federal Reserve and other agencies were informed by analyses that balanced the possible
stability gains from greater loss-absorbing capacity against the possible adverse effects on
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lending and economic growth. This ex ante assessment pointed to sizable net benefits to
economic growth from higher capital standards-and subsequent research supports this
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assessment. The steps to improve the capital positions of banks promptly and significantly
following the crisis, beginning with the 2009 Supervisory Capital Assessment Program, have
resulted in a return of lending growth and profitability among U.S. banks more quickly than among
their global peers.
While material adverse effects of capital regulation on broad measures of lending are not readily
apparent, credit may be less available to some borrowers, especially homebuyers with
lessthan-perfect credit histories and, perhaps, small businesses. In retrospect, mortgage borrowing
was clearly too easy for some households in the mid-2000s, resulting in debt burdens that were
unsustainable and ultimately damaging to the financial system. Currently, many factors are likely
affecting mortgage lending, including changes in market perceptions of the risk associated with
mortgage lending; changes in practices at the government-sponsored enterprises and the
Federal Housing Administration; changes in technology that may be contributing to entry by
nonbank lenders; changes in consumer protection regulations; and, perhaps to a limited degree,
changes in capital and liquidity regulations within the banking sector. These issues are complex
and interact with a broader set of challenges related to the domestic housing finance system.
Credit appears broadly available to small businesses with solid credit histories, although
indicators point to some difficulties facing firms with weak credit scores and insufficient credit
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histories. Small business formation is critical to economic dynamism and growth. Smaller firms
rely disproportionately on lending from smaller banks, and the Federal Reserve has been taking
steps and examining additional steps to reduce unnecessary complexity in regulations affecting
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smaller banks.
Finally, many financial market participants have expressed concerns about the ability to transact
in volume at low cost-that is, about market liquidity, particularly in certain fixed-income markets
such as that for corporate bonds. Market liquidity for corporate bonds remains robust overall, and
the healthy condition of the market is apparent in low bid-ask spreads and the large volume of
corporate bond issuance in recent years. That said, liquidity conditions are clearly evolving. Large
dealers appear to devote less of their balance sheets to holding inventories of securities to
facilitate trades and instead increasingly facilitate trades by directly matching buyers and sellers.
In addition, algorithmic traders and institutional investors are a larger presence in various
markets than previously, and the willingness of these institutions to support liquidity in stressful
conditions is uncertain. While no single factor appears to be the predominant cause of the
evolution of market liquidity, some regulations may be affecting market liquidity somewhat. There
may be benefits to simplifying aspects of the Volcker rule, which limits proprietary trading by
banking firms, and to reviewing the interaction of the enhanced supplementary leverage ratio with
risk-based capital requirements. At the same time, the new regulatory framework overall has
made dealers more resilient to shocks, and, in the past, distress at dealers following adverse
shocks has been an important factor driving market illiquidity. As a result, any adjustments to the
regulatory framework should be modest and preserve the increase in resilience at large dealers
and banks associated with the reforms put in place in recent years.
Remaining challenges
So where do we stand a decade after the onset of the most severe financial crisis since the
Great Depression? Substantial progress has been made toward the Federal Reserve's
economic objectives of maximum employment and price stability, in putting in place a regulatory
and supervisory structure that is well designed to lower the risks to financial stability, and in
actually achieving a stronger financial system. Our more resilient financial system is better
prepared to absorb, rather than amplify, adverse shocks, as has been illustrated during periods
of market turbulence in recent years. Enhanced resilience supports the ability of banks and other
financial institutions to lend, thereby supporting economic growth through good times and bad.
Nonetheless, there is more work to do. The balance of research suggests that the core reforms
we have put in place have substantially boosted resilience without unduly limiting credit
availability or economic growth. But many reforms have been implemented only fairly recently,
markets continue to adjust, and research remains limited. The Federal Reserve is committed to
evaluating where reforms are working and where improvements are needed to most efficiently
maintain a resilient financial system.
Moreover, I expect that the evolution of the financial system in response to global economic
forces, technology, and, yes, regulation will result sooner or later in the all-too-familiar risks of
excessive optimism, leverage, and maturity transformation reemerging in new ways that require
policy responses. We relearned this lesson through the pain inflicted by the crisis. We can never
be sure that new crises will not occur, but if we keep this lesson fresh in our memories-along
with the painful cost that was exacted by the recent crisis-and act accordingly, we have reason
to hope that the financial system and economy will experience fewer crises and recover from any
future crisis more quickly, sparing households and businesses some of the pain they endured
during the crisis that struck a decade ago.
1
Over the 12 quarters ending in the first quarter of this year, borrowing by the nonfinancial business sector
increased at an annual rate just above 6 percent, on average, and borrowing by households and nonprofit
institutions rose at an annual rate of 3-1/4 percent, on average; the corresponding average pace of increase in
nominal gross domestic product was 3-3/4 percent. Over the same period, lending by private depository
institutions advanced at an annual rate of nearly 6-1/2 percent.
2
A contemporaneous perspective on subprime mortgage market developments at this time is provided in Ben S.
Bernanke (2007), "The Subprime Mortgage Market," speech delivered at the Federal Reserve Bank of Chicago's
43rd Annual Conference on Bank Structure and Competition, Chicago, May 17.
3
On August 17, 2007, the Federal Reserve Board reduced the primary credit rate at the discount window by 50
basis points and announced a change to the Reserve Banks' usual practices to allow the provision of term
financing for as long as 30 days, renewable by the borrower. The changes were announced to remain in place
until the Federal Reserve determined that market liquidity had improved materially. See Board of Governors of
the Federal Reserve System (2007), "Federal Reserve Board Discount Rate Action," press release, August 17.
4
The proceedings from the 2007 conference are instructive about the range of views regarding housing-related
developments preceding the acute phase of the financial crisis. See Federal Reserve Bank of Kansas City
(2007), Housing, Housing Finance, and Monetary Policy,proceedings of an economic policy symposium
(Kansas City: FRBKC).
5
For a discussion of the correspondence between the steps taken by the Federal Reserve and those suggested
by Walter Bagehot in the 19th century, see Brian F. Madigan (2009), "Bagehot's Dictum in Practice: Formulating
and Implementing Policies to Combat the Financial Crisis," speech delivered at the Federal Reserve Bank of
Kansas City's annual economic symposium, Jackson Hole, Wyo., August 21.
6
A timeline of developments in the United States over the financial crisis is available on the Federal Reserve
Bank of St. Louis's website at www.stlouisfed.org/financial-crisis/full-timeline. The failure of Fannie Mae and
Freddie Mac is marked by the decision of the Federal Housing Finance Agency (FHFA) to place Fannie Mae and
Freddie Mac in government conservatorship on September 7, 2008. Links to documents outlining the actions
taken around this time are available on the FHFA's website
at www.fhfa.gov/Media/PublicAffairs/Pages/Conservatorship-of-Fannie-Mae-and-Freddie-Mac.aspx.
7
In the fall of 2008, the three largest investment banks were (in alphabetical order) Goldman Sachs, Merrill Lynch,
and Morgan Stanley. Merrill Lynch agreed to be acquired by Bank of America, and the remaining two firms
became bank holding companies.
8
The notion that popular sentiment may contribute to mispricing of assets-for example, the power of the
madness of crowds-is attributed to Charles Mackay (1841), Memoirs of Extraordinary Popular Delusions and
the Madness of Crowds (London: Richard Bentley). A more modern perspective, and one using a phrase as
memorable as the madness of crowds, is provided by Robert J. Shiller (2016), Irrational Exuberance, 3rd ed.
(Princeton, N.J.: Princeton University Press). The notion that economic stability can generate a buildup of
imbalances that subsequently contributes to instability is presented in Hyman P. Minsky (1974), "The Modeling
of Financial Instability: An Introduction," in Modeling and Simulation, Vol. 5, Part 1, proceedings of the Fifth
Annual Pittsburgh Conference (Pittsburgh: Instrument Society of America), pp. 267-72. A related discussion of
how financial excesses often precede downturns (and even panics) is provided in Charles P. Kindleberger and
Robert Z. Aliber (2005), Manias, Panics, and Crashes: A History of Financial Crises, 5th ed. (Hoboken, N.J.: John
Wiley & Sons).
9
These improvements encompass a number of changes. The regulatory requirements for capital have been
increased and focus on Tier 1 common equity, which proved more capable of absorbing losses than
lowerquality forms of capital. The role of bank internal models in determining risk-weighted assets also has been
significantly constrained in the United States. In addition, exposures previously considered off balance sheet
have been incorporated into risk-weighted assets.
10
The Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency adopted a final rule to
strengthen the leverage ratio standards for the largest, most interconnected U.S. banking organizations on April
8, 2014. Under the final rule, covered bank holding companies must maintain a leverage buffer of 2 percentage
points above the minimum supplementary leverage ratio requirement of 3 percent, for a total of 5 percent, to
avoid restrictions on capital distributions and discretionary bonus payments (see Board of Governors of the
Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency
(2014), "Agencies Adopt Enhanced Supplementary Leverage Ratio Final Rule and Issue Supplementary
Leverage Ratio Notice of Proposed Rulemaking," joint press release, April 8). The Federal Reserve approved a
final rule imposing risk-based capital surcharges on the largest, most systemically important U.S. bank holding
companies on July 20, 2015; in connection with the final rule, the Board issued a white paper describing the
calibration of the risk-based capital surcharges (see Board of Governors of the Federal Reserve System (2015),
"Federal Reserve Board Approves Final Rule Requiring the Largest, Most Systemically Important U.S. Bank
Holding Companies to Further Strengthen Their Capital Positions," press release, July 20).
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Moreover, the Fe