Bet on deregulation | Allnews

The prospect of a slowdown in American growth in the face of the rise in customs duties could lead the economy in stagflation. Additionally, For example, deteriorate assets to the banks of banks. Consequently,

Since the 2008 financial crisis. Nevertheless, financial sector regulations have become much strict. Meanwhile, Banking establishments. Consequently. For example, in particular, had to quickly increase the levels of capital and liquidity, adopt advanced risk management tools and comply with regulatory developments. In addition, The re -election of Donald Trump marks a possible turning point towards a deregulation of the financial sector. Furthermore, a trend already noticeable in the last stress tests of the Federal Reserve. Furthermore, In 2025. Moreover, Additionally. Furthermore, the 22 main American banks bet deregulation | allnews new crossed this assessment with significant ease, a sign of a regulatory environment that has become more lenient. Similarly, bet deregulation | allnews Two questions then arise: how could the stress test methodology evolve under the Trump administration? Furthermore, And above all, what other regulations could be reduced?

Excess capital: how banks have gained flexibility

The 2025 stress test was clearly less severe than that of 2024. increasing the capacity of banks to redistribute capital. In the “opposing” scenario (marked recession, unemployment at 10%, etc.), aggregated losses amounted to $ 553 billion, against $ 685 billion in 2024. Despite this, banks have retained a level of capital higher than minimum requirements. The Tier 1 capital ratio fell only 1.8 percentage points, compared to 2.8 the previous year.

Result: many banks will reduce their required capital cushions. The Minimal Goldman Sachs ratio could drop from 13.7% to 10.7% and similar declines bet deregulation | allnews new are anticipated for Wells Fargo, M&T Bank and Morgan Stanley. Furthermore. The shareholders should benefit from it via increases in share buybacks bet deregulation | allnews of 12% on average over one year.

Deregulation roadmap: what to expect?

Under the impetus of the White House. the Fed. other agencies have already announced at the end of June wanting to reduce the additional lever ratio (ESLR), a post-2008 rule imposing more strict capital requirements on total assets. This measure would release up to $ 210 billion in regulatory capital.

This would allow banks to reposition themselves more actively on the market for American treasury bills but also to. reward shareholders via dividend increases. as well as by action buying programs.

Other softenings are also envisaged:

• The postponement. reduction of Basel III standards “endgamous”. supposed to increase weighted assets by risks;
• A drop in overloads applied to global systemic banks bet deregulation | allnews new (GSIBS);
• More flexible rules for medium -sized banks.

The final adoption of the Basel III rules in the United States could be pushed back bet deregulation | allnews to 2026. canceled, and any required capital increase would remain limited. If these softenings are confirmed. large banks could generate several hundred billions of dollars in excess capital, strengthening their redistribution capacity.

Between financial stability. competitiveness

From an economic point of view. lighter regulations would allow the banking sector to mobilize more capital to credit, thus stimulating growth and improving international competitiveness. The shareholders would be the first beneficiaries. like the recent massive action of action launched by JPMorgan. Morgan Stanley, or the increase in the Goldman Sachs dividend.

However, this relaxation includes structural risks. A reduction in equity requirements combined with a weakening of supervision could weaken the financial system. Martin Gruenberg. outgoing president of the Federal Deposit Insurance bet deregulation | allnews new Corporation (FDIC). alert on the dangers of a prevailing return to deregulation, stressing that the United States remains vulnerable to the same excesses which led to the crises bet deregulation | allnews of the 1980s, that of 2008 and to regional bank failures of 2023. risky banking.

The results of the 2025 stress tests show that large American banks are solid in the current regulatory framework. which strengthens the argument in favor of partial deregulation. The most likely reforms include:

• Reduced capital requirements,
• A lower ESLR,
• Lightened rules for systemic and regional banks.

If these measures can release capital. stimulate credit and promote the remuneration of shareholders, they nevertheless include increased risks for the stability of the system. The prospect of a slowdown in American growth in the face of the rise in customs duties could lead. the economy in stagflation. deteriorate assets to the banks of banks. bet deregulation | allnews new The second quarter results should teach us more about the state of mind of the management of major American. banks about the strategic allocation of excess capital.