* Big banks to seek relief on Basel credit line capital

charge

* Banks also want GSIB surcharge recalculated to reflect

economic growth

* Regulators and banks aim to finalize rules before

November election

* Fed Vice Chair for Supervision Bowman has urged banks

to avoid aggressive lobbying

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 ( JPM ), 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 ( JPM ) and

other big banks such as Wells Fargo ( WFC ), Citigroup ( C ),

Bank of America ( BAC ), 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 ( JPM ), Wells Fargo ( WFC ), Citi and

Bank of America ( BAC ) 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 ( JPM ) 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 ( GS ).

"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 proposalby 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."