Wall Street's largest bank alliance has fractured as the Federal Reserve finalizes capital rule overhauls. Goldman Sachs and Morgan Stanley are at odds with JPMorgan and Bank of America over capital surcharges for globally systemic U.S. banks.
The disagreement focuses on a proposed change to short-term wholesale funding exposure measurements. Goldman Sachs supports replacing the current ratio-based method with an absolute measurement.
The firm argued in a comment letter that the change ensures a more transparent and economically grounded measure. This modification favors Goldman Sachs and Morgan Stanley due to their higher proportions of short-term funding.