Major bank executives have been told by Michelle Bowman, Vice Chair for Supervision The U.S. Federal Reserve, that she does not expect the banking industry to stage another aggressive pushback in an attempt to win further capital relief, according to an exclusive report by Reuters, citing three people with knowledge of the communications.
Last month, the Fed unveiled relaxed new drafts of the “Basel III” and “GSIB surcharge” rules that the central bank estimated would reduce capital levels at big U.S. banks by around 4.8%. It was a win for the industry which fought hard to water down the Fed’s original 2023 plan that had envisaged 20% hikes, Reuters said.
Reuters said that JPMorgan, the biggest U.S. bank, stated last week that its capital level will actually increase by around 4% under the plan. In his annual shareholder letter this month, JPMorgan CEO Jamie Dimon, said the proposals were still “very flawed” and that aspects were “un-American.”
Reuters reported that other big bank executives said during earnings last week that the industry likely would seek some changes and expected to offer feedback to the Fed during its formal 90-day comment period.
Lobbied Lawmakers
Big banks fought the 2023 capital plan with an unprecedented campaign that included lobbying congressional lawmakers, billboard posters in the District of Columbia area, prime-time commercials, and threats to sue, Reuters noted. The banks argued that it would stifle lending and harm the economy.
That plan was led by Bowman’s Democratic predecessor, Michael Barr, Reuters noted.
Bowman and other Fed officials have said in meetings with bank executives in recent weeks that they have worked hard to address bank complaints and do not expect the banking industry to reprise the aggressive tactics they deployed when fighting the 2023 proposals.
Officials have conveyed that industry comments, which are due by around mid-June, should be limited and specific, two of Reuters’ sources said.
