By Pete Schroeder
WASHINGTON, May 7 (Reuters) - Wall Street banks will push again to shrink capital charges on credit card lines and globally important U.S. lenders as they make a final bid to win further capital relief before the U.S. November election, said four industry officials familiar with the industry discussions.
The Federal Reserve in March unveiled new relaxed drafts of sweeping capital rules which it estimated would reduce the funds big banks must put aside to absorb potential losses by
around 4.8%, arguing the current rules are hurting the economy.
While the industry generally sees that as a victory compared with the central bank's original 2023 plan, which had envisaged a 20% capital hike, the benefits will be uneven and a handful of big banks feel they are losing out compared to their peers, the people said.
JPMorgan Chase, the largest U.S. lender, said last month it expects its capital will actually increase, while its competitors' will fall.
Ahead of the feedback deadline next month, JPMorgan and other big banks such as Wells Fargo, Citigroup, Bank of America, as well as their trade groups, are drawing up a final wishlist of fixes.
One key issue, the people said, is a requirement under the "Basel" proposal to effectively hold capital against 10% of unused credit lines known as "unconditionally cancelable commitments," the most common of which is unused credit card lines. Currently, such credit lines are capital-free because banks can yank them at any time, but regulators argue that in practice lenders may not do that during times of economic stress due to client relationships or other risk management practices.
Banks should benefit from a capital break on used credit lines also proposed in March. But big banks will nevertheless argue the new charge could force them to reduce credit card limits and cancel unused lines, said the people. Regional and smaller banks will not be affected because they will fall under a new proposed simpler capital regime, two of the people said.
"The rational thing to do is cut credit limits closer to approximate usage," said Matthew Bisanz, a partner at Mayer Brown who is closely tracking the proposal and said the amount of affected unused credit would be "enormous."
Spokespeople for the Fed, JPMorgan, Wells Fargo, Citi and Bank of America declined to comment or did not respond to requests for comment. The sources declined to be identified because the regulatory discussions are private.
BANKS SURPRISED CHARGE SURVIVED
There was nearly $5 trillion in unused credit card lines at the end of 2025, according to Federal Deposit Insurance Corporation data, although Reuters could not immediately ascertain how much of that might be affected by the proposal.
The Basel Committee, the international body which sets capital standards, originally proposed the new charge which was subsequently included in the 2023 plan drafted by Democratic officials at the Fed and other bank regulators under former President Biden.
Having successfully fought to delay and water down that draft, banks hoped President Trump's Republican regulators would narrow or eliminate the charge and were disappointed to see it had survived once they got their hands on the fine print, three of the people said.
Another major point of contention relates to a capital levy the Fed imposed on globally systemically important or "GSIB" U.S. banks following the 2008 financial crisis. Those lenders have long argued that the Fed should update inputs it uses to calculate that "GSIB surcharge," which it set in 2015, to adjust for economic growth and in turn more accurately reflect the size of the banks relative to the global economy.
The Fed last month proposed a one-time adjustment to account for recent economic growth and automatic updates for future growth, but the banks will again press to go back to 2015, a tweak that could significantly shrink their surcharges, two of the people said. JPMorgan Chase CEO Jamie Dimon last month called aspects of the surcharge "nonsensical," saying it punished the bank for its success.
Other likely bank asks will relate to the treatment of trading book assets and the interaction of the rules with annual bank stress tests, said analysts.
"A lot of banks have said, look, we think that this is a very good starting point ... but there are things in the proposal that they would like to see changed," said Richard Ramsden, who leads the research coverage of financials at Goldman Sachs.
"At this stage, given just how long this debate has gone on for, it makes sense to just focus on getting this done."
BANKS STILL PLAN TO PUSH
Banks are keen to finalize the rules before November's mid-term elections potentially hand more power to Democrats skeptical of what some have said is a Wall Street giveaway, three people said, giving lenders just a few months to win favorable changes.
Fed Vice Chair for Supervision Michelle Bowman, who is leading the effort, has said she wants to finalize the proposal by year end. She has also told banks she does not expect them to reprise the aggressive tactics they used to fight the 2023 plan, and to target their responses, Reuters reported.
Mindful they may not have such friendly regulators for a decade or more, the industry nevertheless plans to push for as much relief as possible, two of the people said.
"It's an unbelievably complicated proposal," Greg Baer, CEO of the Bank Policy Institute, which led the industry pushback the first time, told Congress last month. "I don’t even want to know how long our comment letter is going to be."
(Reporting by Pete Schroeder; additional reporting by Saeed Azhar; editing by Michelle Price and Nick Zieminski)
