WASHINGTON—Federal Reserve Vice Chair for Supervision Michelle Bowman has signaled to major U.S. bank executives that regulators do not expect another aggressive industry campaign for additional capital relief, according to a new report.
Citing three people familiar with the discussions, Reuters reported that Bowman and other Federal Reserve officials have told banks in recent meetings that regulators have already addressed many industry concerns in newly proposed capital rules and anticipate more limited, targeted feedback during the formal comment period.
Last month, the Federal Reserve released revised drafts of its “Basel III” and global systemically important bank (GSIB) surcharge rules that would reduce capital requirements for large U.S. banks by about 4.8%, according to Reuters. The changes marked a shift from the Fed’s original 2023 proposal, which had called for roughly a 20% increase and drew intense opposition from the banking industry.
Uneven Benefits
Still, Reuters reported that the benefits of the revised framework are uneven. JPMorgan Chase, the nation’s largest bank, said this week its capital requirements would actually rise by about 4% under the proposal. CEO Jamie Dimon described elements of the plan as “very flawed” and “un-American” in his annual shareholder letter, according to Reuters.
Other bank executives said during earnings calls that the industry is likely to seek further adjustments through the Fed’s 90-day comment period, Reuters reported.
The industry mounted an unusually aggressive campaign against the 2023 proposal, including lobbying lawmakers, running billboard and television advertisements, and threatening legal action, Reuters noted. That earlier effort was led by former Fed supervision chief Michael Barr.
‘Restrained Engagement’
In contrast, Fed officials have indicated they expect more restrained engagement this time, with comments due by mid-June, Reuters reported. A Federal Reserve spokesperson declined to comment to Reuters.
Speaking this week at an Institute of International Finance conference in Washington, Bowman said she aims to finalize the rules this year.
“I’m sure not all of it is going to be positive, but my hope is we’ve struck the right balance,” Bowman said, according to Reuters, calling the proposal “a very middle-of-the-road, reasonable” approach.
Reuters reported that Bowman, appointed by President Donald Trump, and Treasury Secretary Scott Bessent have argued that recalibrated capital rules can support economic growth while maintaining financial stability.
Politics Affects Timeline
The timeline for finalizing the rules is also influenced by political considerations, Reuters reported, including the possibility that upcoming midterm elections could shift control of Congress and intensify scrutiny of the proposals. Within the Fed, Democratic governors Lisa Cook and Philip Jefferson supported the plan, while Barr dissented.
Despite those divisions, Bowman said the central bank worked to build consensus around the revised framework, Reuters reported.
