IIB, Other Trades Urge Fed to Recalibrate Capital Rules for IHCs

The Institute of International Bankers ("IIB") and five other trade associations urged the Federal Reserve Board to reduce requirements imposed on U.S. intermediate holding companies of foreign global systemically important banks as to the required internal loss-absorbing capacity and long-term debt, arguing that the framework traps capital.

In an August 11, 2026, letter to FRB Vice Chair for Supervision Michelle Bowman, the IIB, the American Bankers Association, the Bank Policy Institute, the Institute of International Finance, SIFMA, and the U.S. Chamber of Commerce said the current internal total loss-absorbing capacity framework forces excessive pre-positioning of resources. They recommended cutting the internal capacity requirement for non-resolution intermediate holding companies to no more than 75 percent of the external requirement that would apply if the company were itself a resolution entity, down from 90 percent; eliminating the separate long-term debt requirement within the internal capacity framework; and letting firms satisfy internal capacity needs through any appropriate mix of eligible capital, eligible long-term debt, and other qualifying internal instruments.

The associations argued the current calibration is unnecessarily high, given these holding companies' smaller systemic footprint, which the trade groups said more closely resembles non-global U.S. regional bank holding firms. The trade groups warned that requiring too much internal capacity could push U.S. host authorities toward ring-fencing assets, undermining the cooperative cross-border resolution framework the rules aim to support.

On long-term debt, the associations said losses at the intermediate holding company would ultimately be borne by the parent resolution entity so a prescribed debt amount adds complexity and cost without materially improving resolvability.