Senators Press Fed’s Vice Chair for Supervision to Oppose FSB Policy on European Banks

Senate Democrats asked Federal Reserve ("Fed") Vice Chair for Supervision Michelle Bowman to oppose the renewal of a Financial Stability Board ("FSB") policy that they argue provides preferential treatment to systemically important European banks.

In their letter, the Senators argued that the policy—allowing European global systemically important banks ("GSIBs") to treat two-thirds of their intra-European exposures as "domestic" rather than "international"—unfairly lowers European GSIBs' capital requirements and undermines global financial stability. They said this approach gives European GSIBs a competitive advantage over U.S. institutions and distorts the level playing field envisioned by international banking standards. The Senators also criticized the Basel Committee for adopting the change behind closed doors and without public comment, calling the process inconsistent with its own charter and transparency commitments.

The Senators stated that Europe’s banking union remains incomplete, lacking both a unified deposit insurance framework and a liquidity backstop to manage stress events. The Senators asked Ms. Bowman, as Chair of the FSB's Standing Committee on Supervisory and Regulatory Cooperation to block an upcoming renewal of the policy favoring European banks and to push for fair and consistent global banking standards. They also asked for clarification on the Fed's position on the FSB policy, its implications for global stability, and the Fed’s commitment to open and accountable rulemaking.

The Senators requested a response by November 14, 2025.