A group of America’s biggest banking titans are considering whether they should pull a shocking move – suing the U.S. Federal Reserve.
JPMorgan Chase, Citibank and Goldman Sachs are on the list of major banks that, using their trade group, have hired one of the best conservative trial lawyers in the country to draft the lawsuit, reports Semafor.
Eugene Scalia, son of the former Supreme Court justice Antonin Scalia, is spearheading the legal effort, which would aim to eliminate proposed rules that would force banks to increase the amount of cash they have on hand.
“[Scalia] is quietly drawing up a lawsuit seeking to block the proposed rules on behalf of the Bank Policy Institute, a trade group that represents JPMorgan, Citibank, Goldman Sachs, and others, people familiar with the matter said.
It would be the first time in recent memory that the industry has sued the Fed, and a departure from standard halls-of-power persuasion efforts that try to avoid antagonizing its chief regulator.
The Fed wants banks to hold an additional 20% in cash on their balance sheets. The move is designed to ensure they have enough capital to withstand concerns about liquidity and avert the types of bank runs that ripped through the banking sector one year ago.
But the banks say the rules are far too strict, citing an internal analysis that shows they would actually be forced to keep 30% in cash on hand.
Scalia says the Fed has plenty of explaining to do.