Banking and Finance Law Daily Wrap Up, CAPITAL AND BASEL ACCORDS—Financial Services Forum defends capital distributions as fully compliant, economically vital, (Sep 24, 2025)

By Shashi Kant, BALLB, LLM.

Responding to senators’ concerns, the Forum highlighted rigorous capital planning, shareholder returns’ economic role, and its commitment to financial stability.

The Financial Services Forum has responded to Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) regarding member banks’ recent capital distributions, stating that dividend increases and share buybacks comply with regulatory requirements and serve economic functions. Responding to the senators’ September 8 inquiry (see Banking and Finance Law Daily, Sept. 9, 2025), Forum President and CEO Amanda Eversole said the organization’s members “do support strong and appropriate capital standards and comply with the most stringent capital standards among both U.S. and international banks.” The senators had questioned six Forum member banks about their decisions to increase dividends and authorize stock buybacks following the Trump administration’s easing of capital requirements, rather than expanding lending or reducing costs for consumers and businesses.

Capital standards response. Eversole stated that Forum members undergo annual stress tests “that are more severe than the economic crisis, consistently demonstrating U.S.” The letter cited Fed Chairman Jerome Powell’s 2019 statement that he views “the level of capital requirements and the level of capital in the system as being about right.” The Forum also referenced the Federal Reserve’s April 2025 Financial Stability Report, which noted that “banks maintained historically high levels of regulatory capital.” According to the letter, “The robust level of capital among Forum members, and in the banking system more generally, has long been recognized by regulators.”

Capital distribution explanation. On capital distributions, Eversole stated that “all distributions to investors are made in a manner that fully complies with all capital and related regulatory requirements.” She added that “all capital distributions are part of each firm’s extensive capital planning process that is regularly reviewed and approved by regulators.” The Forum said capital distributions serve economic functions. “Bank shareholders demand a market-based return on their invested capital as banks compete with all industries for scarce equity capital,” Eversole wrote. She stated that unpredictable and volatile capital distributions “would raise shareholder risks and result in reduced availability of equity capital for banks that would drive up the cost of equity capital and ultimately increase the cost and reduce the availability of credit in our economy.”

Economic impact claims. The letter cited widespread ownership of bank stocks, referencing Federal Reserve data showing that “58 percent of families have stock holdings.” Eversole stated that capital distributions “support a range of critical economic needs including ongoing living expenses like rent and food, the purchase of durable goods like cars and home appliances, and the funding of educational expenses that builds the human capital needed to drive our economy forward.”

The Forum also stated that capital distributions are “often directed back into the economy as shareholders use their distributions to make investments in other industries to drive productive investment that grows the economy.”

Capital planning process. Eversole described the capital planning process, stating it “prudently assesses both the risks and opportunities of future credit creation.” She said Forum members “constantly strive to meet the credit needs of the households, businesses and communities that they serve” while engaging “in proactive risk management to assess risk and allocate capital to support their safe and sound operations.” The letter described this process as providing a return on invested capital that will ensure a stable capital base that supports future growth and credit creation.

Future plans. The Financial Services Forum stated its commitment to continued capital management. “Our members will continue to execute forward-looking and rigorous capital planning to make prudent decisions about shareholder distributions that support credit creation while also supporting the needs of shareholders and the broader economy,” Eversole wrote.

The Forum’s response addresses criticism from major banks following regulatory changes. The senators had originally stated the banks’ actions “disproportionately benefit their wealthy shareholders and executives while threatening American financial stability.” The letter represents the banking industry’s response to criticism from lawmakers who argue that eased capital requirements should translate to increased lending and lower costs for consumers rather than higher returns to shareholders.

Companies: Bank of America; Citi; Financial Services Forum; Goldman Sachs; JPMorgan; Morgan Stanley; Wells Fargo

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