The Clearing House, SIFMA, the American Bankers Association and the Financial Services Roundtable (collectively, the “Associations”) provided comments in response to a proposal by the Financial Stability Board (“FSB”) to impose a total loss-absorbing capacity (“TLAC”) requirement on global systemically important banking groups (“G-SIBs”).
In the letter, the Associations expressed their support for a TLAC requirement for G-SIBs, stating that it is a “critical step” toward ending “Too Big to Fail.” However, the Associations indicated that a number of aspects of the proposal require modification and stressed the importance of ensuring that the requirement will be calibrated empirically to achieve its policy objective.
The letter recommended, among other things, that the FSB both (i) identify and explain the standard it uses in calibrating TLAC and (ii) support its calibration against that standard with empirically based forward-looking stressed analyses, as well as analyses of losses experienced by large institutions historically.
See: The Associations’ Comment Letter; SIFMA Press Release.