Bank Regulators Hope to Sell Congress on Deregulation

U.S. banking regulators (Fed, FDIC, OCC) are testifying before the House Financial Services Committee to advance a deregulatory agenda they say will free capital and boost bank activity. Regulators argue tailoring oversight to material financial risks rather than process checks will enable banks to lend more, pursue acquisitions, increase shareholder distributions and invest in technology. Alvarez & Marsal estimates deregulation could free about $2.5 trillion in asset capacity for U.S. banks and lift return on tangible common equity by roughly 6%. Regulators also cautioned that risks remain, noting AI has accelerated the identification of vulnerabilities. Market implications: deregulatory moves are likely seen as bullish for bank profitability and credit growth, supporting U.S. equities, though heightened scrutiny of model and systemic risks could temper enthusiasm.