Better Markets Sues the Fed, Alleging Bowman's Private Lobbying Violated the Administrative Procedure Act
nashnova research
Nonprofit Better Markets sued the Federal Reserve and Vice Chair for Supervision Michelle Bowman, alleging she privately contacted Wall Street banks during a capital-rule comment period in violation of the Administrative Procedure Act — a rare legal counterattack by a regulatory advocate against the financial deregulation push.
What is this lawsuit actually about?
Better Markets filed suit on September 10 in a Washington, D.C. federal court against the Fed and Vice Chair for Supervision Michelle Bowman.
The core allegation: Bowman privately engaged with Wall Street banks during an open comment period on capital rules, violating the Administrative Procedure Act (APA — the law governing how federal agencies make rules).
This means → The dispute is not about whether the rules are good or bad. It is about whether the process for writing them was legal — the APA bars officials from privately communicating with interested parties on pending rulemaking.
What is Bowman accused of doing?
The complaint cites a Reuters report from April: Bowman privately indicated she did not expect banks to mount major pushback against the next round of capital-rule revisions.
It also cites Bloomberg: Bowman privately told Wall Street leaders she backed the capital plan and asked banks to stop seeking exemptions.
In plain terms = A senior official overseeing a rulemaking gave the regulated banks a private read on where things were heading — while the public comment window was still open. The plaintiff argues this turned the process into a formality.
What does the plaintiff want the court to do?
The complaint calls the conduct a "tainted and bad-faith rulemaking process" and invokes the exception for "clear violations of important constitutional or statutory rights."
This means → Better Markets is asking the court to halt the rulemaking entirely, not merely seek accountability after the fact.
A Fed spokesperson did not immediately respond to a request for comment. Bowman has previously said her goal is to streamline the regulatory framework to better reflect actual risk.
Why is this lawsuit unusual?
Lawsuits challenging the Fed's rulemaking process are extremely rare. Large banks sued the Fed in 2024 over stress tests and fair-lending rules, but that was banks suing a regulator.
This time the direction is reversed: a regulatory advocate is suing the Fed — arguing it is regulating too loosely, not too strictly.
This reflects a broader shift: amid the Trump administration's push to loosen financial regulation, public-interest groups are now attempting to block deregulation through the courts, rather than relying on public pressure alone.
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