The Federal Reserve is racing to finalize the most significant overhaul of bank capital standards since the 2007-09 financial crisis. Michelle Bowman, the Fed’s vice chair for supervision, has proposed a 4.8% reduction in capital requirements—a sharp departure from a previous 20% hike proposed under her predecessor, Michael Barr. Industry leaders are now pressuring the Fed to secure a bipartisan consensus, aiming to insulate the new rules from potential Democratic probes or future legislative clawbacks.

Securing the votes of Democratic-appointed governors Lisa Cook and Philip Jefferson remains the central hurdle. While both officials supported moving the proposal forward, their final approval depends on how the regulations balance economic growth against financial resilience. Some banks are lobbying for deeper relief, such as reductions in global systemically important bank surcharges, yet executives acknowledge that pushing too far could alienate the very Democratic support they need for long-term stability. Legal experts warn that a split vote would not only delegitimize the policy but also provide ammunition for advocacy groups like Better Markets, which has already initiated litigation against the central bank regarding the rulemaking process.