I just saw that Wall Street has just achieved a pretty big victory in regulatory matters. The Federal Reserve presented this week a plan that reduces capital requirements for large U.S. banks by 4.8%, which is probably one of the most aggressive changes since the 2008 crisis.

To put it in context, the biggest banks like JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup will see their regulatory burden significantly eased. But the interesting part is that smaller banks benefit even more: medium-sized ones see a 5.2% drop in capital requirements, while the smaller ones achieve reductions of up to 7.8%. That is, Wall Street is managing to relax restrictions across the board.

The Fed justifies this as part of a strategy to encourage lending and enable U.S. banks to better compete against private credit funds. Jay Powell said that after nearly two decades since the crisis, it’s time to review and recalibrate certain rules. Additionally, banks will no longer need Fed approval for synthetic risk transfers, which essentially gives them more freedom to move capital.

Not everyone at the Fed agrees, though. Michael Barr, a board member, publicly opposed, arguing that these reforms are reckless and would harm the resilience of the financial system. He estimated that if changes in leverage rules are included, the actual reduction could reach 6% in capital requirements.

What’s happening here is that the big banks returned more than 90% of their profits to shareholders last year, so now they will seek to allocate more capital to loans and probably acquisitions. This could intensify pressures in other markets: the Bank of England and the EU are already watching how Washington implements these reforms before making their own decisions.

In concrete numbers, we’re talking about U.S. banks freeing up around $117 billion in capital requirements. It’s a quite significant move that Wall Street has been requesting for some time. The proposals are in a 90-day consultation period, so there will be time to see how the market reacts and whether other global regulators follow the same path.