Better Markets Takes On Federal Reserve Over Capital Rule Rewrite
A rare legal challenge to the US Federal Reserve is underway as Better Markets sues the central bank over its handling of major bank capital rules. The nonprofit alleges that the Fed's vice chair, Michelle Bowman, engaged in private discussions with Wall Street banks during an open consultation on capital rules, violating federal rulemaking standards.
The lawsuit claims that these alleged improper discussions breach the Administrative Procedure Act and amount to a bad-faith and corrupted rulemaking process. Better Markets seeks to block the ongoing rulemaking process, which it describes as unconstitutional.
This is not an isolated incident; regulatory advocates are growing increasingly resistant to President Donald Trump's administration's efforts to roll back safeguards they view as essential for financial supervision and stability.
The lawsuit highlights a broader trend of Wall Street groups challenging federal regulators in court. In 2024, big banks sued the Fed over annual stress tests and fair lending rules, marking one of the first such challenges in recent memory.