Fed Capital Rules Overhaul Sparks Rare Alliance-Breaking Dispute Among Top Banks

Wall Street's top banks are at odds over a tweak to capital rules that could impact billions of dollars. The Federal Reserve is finalizing an overhaul of capital requirements, which has sparked infighting among JPMorgan, Bank of America, Goldman Sachs, and Morgan Stanley.

The dispute centers on a capital surcharge imposed on global systemically important U.S. banks (GSIBs), which the Fed proposes to revise in response to criticism from industry leaders. The tweak would change how short-term wholesale funding is treated, benefiting banks like Goldman and Morgan Stanley that rely heavily on this type of financing.

JPMorgan and Bank of America executives have been lobbying Fed officials to spike the proposed change, arguing it could crimp lending and hurt the economy. In contrast, Goldman and Morgan Stanley are pushing for a quick finalization of the change, which they claim would improve the rule's risk sensitivity.