Washington nonprofit Better Markets sues Federal Reserve over capital rule overhaul

A spokesperson for the Fed did not immediately respond to a request for comment. Bowman, who has been leading the changes, has previously said her goal is to streamline regulations and oversight to make them more sensitive to real risks.

The Fed in March proposed changes to the Basel, GSIB surcharge and other related rules, which determine funds big banks must put aside to absorb potential losses, which would result in capital falling for the affected lenders by 4.8% in aggregate. The rule was subject to a public consultation which ended in June and is not yet finalized.

"This is not just some technical dispute about process," Better Markets CEO Dennis Kelleher said in a statement. "The corruption alleged here was to rig the rules related to bank capital, which are critical financial stability rulemakings."

While Wall Street groups have frequently sued federal regulators, litigation against the Fed over rulemakings is rare. Big banks in 2024 under the former Democratic administration sued the central bank over its annual "stress test" health checks and fair lending rules, but those lawsuits were the first in recent memory, according to a Reuters analysis at the time and academic Fed-watchers.