Fed's Bowman Accused of Manipulating Rulemaking Process for Bank Capital Rules
A lawsuit has been filed against the Federal Reserve and Vice Chair Michelle Bowman by Better Markets, alleging corruption in the rulemaking process for the Bank Capital Rules. The complaint claims that Bowman held secret meetings with CEOs of Wall Street's biggest banks, including JPMorgan Chase and Goldman Sachs, to coach them on what to say about the proposed rules.
The lawsuit alleges that Bowman and other Fed officials manipulated the record by telling the banks to minimize disagreements with the proposed rules and maximize support for them. This, Better Markets claims, is a violation of the Constitution's guarantee of Due Process.
The Bank Capital Rules are crucial in protecting financial stability, as they determine how much capital banks need to absorb losses. A lack of sufficient capital can lead to bank failures, economic calamities, and bailouts.
Better Markets is seeking to have the rules withdrawn and re-proposed by an untainted official, and for Bowman and other officials involved in the alleged scheme to be disqualified from further involvement in related rulemaking.