Why Wall Street banks want Democrats to back their capital relief
XLF•Wall Street banks are seeking Democratic support for a Federal Reserve proposal that would cut big-bank capital by around 4.8%, hoping bipartisan backing will make the changes harder to reverse. The Fed aims to finalize the overhaul by year-end.
1. Banks seek bipartisan support
Wall Street banks are urging Federal Reserve Vice Chair for Supervision Michelle Bowman to secure Democratic support for the proposed overhaul of bank capital rules. Industry executives say bipartisan backing could make the changes harder to unwind if Democrats gain more power.
2. Capital proposal draws debate
Bowman proposed changes in March that would reduce big-bank capital by around 4.8%, reversing a 2023 plan that would have raised it by 20%. Some banks are seeking further relief, including changes to global systemically important bank surcharges and the treatment of unused credit card lines, but executives said most favor a swift bipartisan vote.
3. Governors hold key votes
Democratic-appointed governors Lisa Cook and Philip Jefferson supported the proposal but said they would assess the final rules after reviewing feedback. Former vice chair Michael Barr opposed it, arguing it would increase systemic risk. The Fed is seeking to finalize the rules by year-end, while the nonprofit Better Markets has sued over the rulemaking process.
