Wall Street giants fracture over Fed capital rule overhaul

At the heart of the dispute is the GSIB capital surcharge, a mechanism designed to buffer systemic risks. While the largest lenders initially united to push for broad deregulation, a specific Fed proposal to adjust how short-term wholesale funding is measured has created a clear divide. JPMorgan and Bank of America, which rely heavily on deposits, argue the change favors their trading-heavy rivals at the expense of traditional lending. JPMorgan estimates it stands to lose $13 billion in potential capital relief under the current draft, while Bank of America faces a $9 billion shortfall.

Conversely, Goldman Sachs and Morgan Stanley contend the revision creates a more accurate, risk-sensitive framework. Given their higher dependence on wholesale funding, these firms stand to gain between $1 billion and $2 billion each in relief. As Fed officials attempt to finalize the rules before potential shifts in Congressional oversight, the infighting has intensified. Fed Vice Chair for Supervision Michelle Bowman has signaled a desire to wrap up the process by year-end, leaving the industry’s largest institutions to scramble for influence before the window for feedback closes.