The advocacy group Better Markets sued the Federal Reserve board and its vice chair for supervision, Michelle Bowman, on Thursday, alleging secret meetings with bank CEOs turned the capital-requirements rulemaking process into a “charade.”
Better Markets asserts Bowman met with JPMorgan Chase CEO Jamie Dimon, Goldman Sachs CEO David Solomon and others during the comment period for a capital-requirements overhaul the Fed and other regulators proposed in March.
Under the proposal, the nation’s largest banks would have to hold 1.4% more in common equity tier 1 capital than they do now, but in tandem with changes to stress tests and the surcharge that global systemically important banks pay, the overall requirement would drop 4.8%.
Dimon, in particular, blasted parts of the proposal as “frankly nonsensical” in his April letter to shareholders. Just over a week later, during JPMorgan’s first-quarter earnings call, Dimon’s colleague, CFO Jeremy Barnum, labeled the G-SIB surcharge “miscalibrated.”
In its lawsuit, filed in the U.S. District Court for the District of Columbia, Better Markets cited press coverage – also from April – reporting that Bowman did not expect aggressive pushback from banks on the capital proposals, and that she told bank CEOs to stop asking for carve-outs.
When meeting with bank CEOs, Better Markets alleged, Bowman directed the banks on what to say – and what to leave unsaid – in public comments on the capital rules. She allegedly emphasized that feedback should be “limited and specific.”
But in doing so, Better Markets argued, comments overstate their support for the proposals and minimize disagreement, manipulating the process to achieve a predetermined result.
“The Fed is supposed to be an honest broker when enacting rules,” Better Markets CEO Dennis Kelleher said in a statement Thursday. “It’s not supposed to turn that process into a charade by secretly meeting, coaching, and coordinating with those banks to rig key financial protection rulemakings. That’s not regulation or supervision. That’s corruption.”
Neither the Fed nor Bowman immediately commented on the lawsuit. They have 60 days to submit a response to the court regarding the complaint.
Bowman testified in June to the House Financial Services Committee that she “did not direct anyone about their comments for the rule,” adding that it was her “responsibility” to engage with bank leaders.
“These are not inappropriate meetings,” she said at the time. “Our comment process is open.”
Better Markets argued otherwise Thursday. The advocacy group asked the district court to declare the rulemaking “fatally compromised” and force the Fed to withdraw the capital proposals and start fresh. It also seeks a court order requiring that Bowman and any other Fed official involved in the alleged activities recuse themselves from the capital-requirements rulemaking process.
Bowman and the Fed violated due process “by creating and presiding over a … pretextual rulemaking proceeding in which critical aspects of the outcome were settled in secret with the regulated industry rather than as a product of genuine open deliberation based on an uninfluenced public record,” Better Markets asserted.
“A record rigged in this manner has denied Better Markets its right to meaningfully participate in the rulemaking,” the advocacy group wrote. “The rulemaking process was designed to enable informed and uninhibited public input for agencies to consider in adopting rules that have the force of law – not be a mere formality to give cover for secret collusion or manipulated, pre-determined outcomes.”
Bank capital requirements have been among the most contentious Fed rulemakings of the past decade. During the Biden administration, the Fed sought to increase capital requirements by 19%, and later 9%, for the biggest banks. Both efforts met vehement opposition from banks, as well as Republican lawmakers.
Facts Only
* Better Markets filed a lawsuit in the U.S. District Court for the District of Columbia.
* The defendants are the Federal Reserve board and Vice Chair for Supervision Michelle Bowman.
* The lawsuit alleges secret meetings occurred between Bowman and bank CEOs, including Jamie Dimon (JPMorgan Chase) and David Solomon (Goldman Sachs).
* These meetings allegedly took place during the comment period for a capital-requirements overhaul proposed in March.
* The proposal requires the largest banks to hold 1.4% more common equity tier 1 capital, while overall requirements would drop 4.8% due to surcharge and stress test changes.
* Better Markets seeks a court declaration that the rulemaking is fatally compromised and a requirement that the Fed withdraw the proposals.
* The lawsuit also requests the recusal of Bowman and other involved officials.
* Michelle Bowman testified to the House Financial Services Committee in June that she did not direct comments for the rule.
* The Federal Reserve and Bowman have 60 days to respond to the complaint.
* The Biden administration previously attempted to increase capital requirements for large banks by 19% and 9%.
Executive Summary
The advocacy group Better Markets has initiated legal action against the Federal Reserve and Vice Chair Michelle Bowman, alleging that the rulemaking process for bank capital requirements was corrupted through secret coordination with industry leaders. The group claims Bowman coached bank CEOs on how to frame their public comments to minimize disagreement and create a deceptive public record, effectively rigging the outcome of the regulation.
Conversely, Bowman has testified under oath that her engagements with bank leaders were part of her official responsibilities and that she never directed the content of their public feedback. The dispute centers on a proposal that introduces conflicting shifts: an increase in common equity tier 1 capital alongside an overall decrease in requirements due to adjustments in G-SIB surcharges and stress tests. While the Fed has yet to respond to the lawsuit, the conflict highlights a broader, long-standing tension between regulatory goals and intense opposition from large financial institutions and political figures.
Full Take
The strongest version of this narrative is that the regulatory process—designed to be a transparent, evidence-based dialogue—was bypassed in favor of private negotiations, rendering the public comment period a performative gesture rather than a meaningful democratic exercise.
This situation follows a classic "regulatory capture" pattern, where the proximity between the regulator and the regulated creates a feedback loop that favors industry stability over systemic risk mitigation. The tension here is not just legal, but epistemic: who defines what "appropriate engagement" looks like? Bowman frames it as a professional responsibility; Better Markets frames it as collusion. The load-bearing element of the narrative is the juxtaposition of private "coaching" against public "support," suggesting a manufactured consensus.
Patterns detected: none
The driving paradigm is the conflict between technocratic efficiency (reaching a deal with banks to ensure compliance) and procedural legitimacy (following the strict letter of the Administrative Procedure Act). This echoes a historical cycle where the financial sector views aggressive capital requirements as "nonsensical" burdens, while advocates view those same requirements as the only barrier against systemic collapse.
The implication for human agency is the erosion of trust in "honest brokers." If the public record is viewed as a curated facade, the ability of outside stakeholders to influence policy is nullified, concentrating power within an insulated circle of policymakers and CEOs.
Bridge Questions:
1. What objective evidence would distinguish "professional engagement" from "coaching" in a regulatory context?
2. How would the outcome of the capital requirements differ if the process were entirely transparent?
3. Does the current legal framework for rulemaking provide sufficient safeguards against private influence?
Counterstrike Scan: A coordinated attack would use this story to incite a broader "anti-establishment" panic, claiming the entire financial system is a fraudulent conspiracy to trigger bank runs or political instability. The current narrative remains a specific legal and procedural dispute over rulemaking, not a systemic call to dismantle the institution. It is clean.