US slashes Wall Street red tape, prompting European banks to demand the same treatment

US banking regulators proposed in March 2026 to ease capital requirements for the country’s largest financial institutions, a move that could free up an estimated $2.5 to $2.6 trillion in lending capacity. The proposal represents a sharp reversal from the stricter Basel III Endgame rules that had been on the table, and it landed during a period when US banks were already posting record profits. Europe responds with its own reform push The European Commission did not wait long to react. On July 17, 2026, the Commission adopted a communication focused on boosting the competitiveness of the EU banking sector. The core pitch: simplify banking rules, reduce barriers to cross-border mergers, and help European lenders scale up enough to compete with their American counterparts. The Commission’s proposals aim to address this by targeting the structural hurdles that have kept European banking fragmented. Cross-border mergers within the EU have historically been difficult, hampered by national regulations, differing supervisory approaches, and political resistance. The deregulation math The numbers behind the US shift are striking. Allowing large banks to hold $2.5 to $2.6 trillion less in c...