Financial nonprofit Better Markets sued the Federal Reserve and governor Michelle Bowman on Thursday, claiming that the central bank's rulemaking process to set bank capital requirements is "rigged."

In a lawsuit filed in the U.S. District Court for the District of Columbia, Better Markets accused Bowman of "colluding with, coaching, and directing" bank executives to minimize opposition for an overhaul of the capital framework.

In March, the Fed, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation jointly proposed reducing the amount of capital that banks are required to hold against potential losses. Starting then, the agencies then opened up a public comment period that ended on June 18.

Thursday's lawsuit alleges that during the public comment period, Bowman conducted "secret" meetings with bank executives at JPMorgan Chase, Goldman Sachs, and other Wall Street banks, in which she instructed them to keep comments "limited and specific" and warned them against using an "aggressive" tone.

The lawsuit claims that the Fed failed to disclose Bowman's meetings despite the fact that major media outlets reported on the conversations. Moreover, Better Markets acknowledged that the Fed disclosed meetings that took place in April during the public comment period, during which Fed staff and bank officials discussed the same capital proposals. The lawsuit argues that what it considers the lack of disclosure around Bowman's meetings "strongly suggests that the Fed is involved in an ongoing coverup."

"What this complaint challenges is the Fed's bad faith and corrupt subversion of that process, engineered to support a predetermined outcome to reduce capital requirements to pre-2008 levels," the complaint reads.

Better Market's lawsuit contends that Bowman's actions "rigged" the rulemaking process. "The rulemaking was thus conducted not as a genuine deliberation open to all, but as a coordinated charade in which the key Fed decisionmaker colluded with the regulated industry in secret during the legally required public proceeding from which the public was-and remains-excluded and in the dark."

During a June hearing before the House Financial Services Committee, the lawsuit notes, Bowman was questioned about the meetings and did not deny they had occurred, testifying that she had met with bank CEOs in her capacity as vice chair for supervision.

Thursday's lawsuit is seeking to have the current proposed rules withdrawn and to have a new process initiated that would be overseen by an official "untainted by the corruption."

"The Fed is supposed to be an honest broker when enacting rules to protect hardworking Americans from Wall Street's biggest, most dangerous banks," said Dennis M. Kelleher, co-founder, President, and CEO of Better Markets, in a statement Thursday. "It's not supposed to turn that process into a charade by secretly meeting, coaching, and coordinating with those banks to rig key financial protection rulemakings. That's not regulation or supervision. That's corruption, and that's why we are suing the Fed and Vice Chair Bowman,"