Big banks are strange companies to own. From the outside, they look slow and lumbering. From the inside, they are a single bad weekend away from a phone call to the Treasury Department. That tension is what makes investing in them so hard.
It is also the whole reason an unglamorous piece of post-2008 regulation called the “living will” exists. Every two years, each of the eight largest U.S. banks has to hand the Federal Reserve and the Federal Deposit Insurance Corporation a confidential “resolution plan.” The plan describes what would happen if the bank was in serious financial distress, detailing exactly how it would unwind itself in bankruptcy without dragging the rest of the economy down with it.
Those plans get reviewed. The reviews get graded. The grades quietly shape what kind of dividends, buybacks, and lending each bank can get away with for the next two years.
They almost never make the news. The investors who pay attention know they should.
The afternoon of May 22, the latest set of grades dropped, and they were as clean as a big-bank shareholder could have hoped for.
Fed, FDIC approve biggest U.S. banks‘ plans to wind down in the event of failure
The agencies “did not identify any shortcomings or deficiencies” in any of the resolution plans submitted last July, according to the joint Fed-FDIC press release issued May 22.
That clean grade covered all eight of the most systemically important domestic banks. Bank of America (BAC), Bank of New York Mellon (BK), Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), State Street (STT), and Wells Fargo (WFC) all made it through. So did 56 foreign banking organizations that file with U.S. regulators.
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Just as important, regulators officially closed out the open complaint from the 2023 review cycle. Bank of America, Goldman, JPMorgan, and Citi had been told in 2024 that their plans for unwinding their massive derivatives books were not adequate. Each of those derivatives-related weaknesses has now been “satisfactorily addressed,” the agencies said in the May 22 release.
The shortcoming tag is gone. For four of the most-traded bank stocks in the world, that is not a small thing.
What easing of big banks’ resolution plans means for investors, their portfolios
The market response so far has been muted, partly because the decision is technical and partly because the broader deregulation story is already well underway. The practical implications for shareholders, though, are real.
Living wills sit upstream of almost every capital decision a big bank makes. Carrying a regulatory shortcoming forces tougher conversations with examiners about dividend hikes, buyback authorizations, and balance-sheet growth. Removing it widens the runway.
The biggest U.S. lenders have already been running on that runway. The eight largest U.S. banks spent a record 33 billion dollars on stock buybacks in the first quarter of 2026 alone, helped along by eased capital rules under the Trump administration, according to Bloomberg.
I pulled the recent capital-return announcements myself, and the trajectory is unmistakable.
Recent big-bank capital moves in the past year
- Bank of America raised its quarterly dividend 8% to $0.28 per share and authorized a new $40 billion stock repurchase program effective August 1, 2025, according to the company’s press release.
- JPMorgan Chase authorized a new $50 billion share repurchase program effective July 1, 2025, and raised its quarterly dividend to $1.50 per share from $1.40, JPMorgan’s investor relations release confirmed.
- Citigroup unveiled a fresh $30 billion buyback at its 2026 investor day, building on a $20 billion program approved in 2025, the bank’s Q1 2026 10-Q filing revealed.
- Morgan Stanley authorized a $20 billion multi-year buyback program, the company’s July 1 press release indicated.
Translation for portfolio holders: more cash flowing out of these companies, and now with one more regulatory cloud cleared.
White House bank deregulation push is bigger story behind the headline
May 22’s clean sign-off did not happen in a vacuum. It happened on the same day Kevin Warsh was sworn in as the new Federal Reserve chair at the White House.
Warsh has been promising what he calls a “regime change” at the central bank, and he has been explicit about supporting bank deregulation. He has “spoken in favor of efforts that Michelle Bowman, the Fed’s vice chair for bank supervision, has undertaken to ease some banking regulations,” according to CNBC.
Bowman is already leading the most sweeping U.S. bank capital overhaul since the 2008 financial crisis.
Related: Major bank drops bombshell on Fed interest-rate bets
The numbers behind that overhaul make the living-wills story look small by comparison. The Federal Reserve’s own staff estimates, published with its March 2026 proposals, project that easing the GSIB surcharge and the Basel rules would cut Common Equity Tier 1 capital requirements at the eight largest U.S. banks by 4.8%, with larger regionals seeing a 5.2% reduction and banks under $100 billion in assets seeing a 7.8% reduction, according to Reuters.
Consulting firm Alvarez & Marsal estimates the full Trump-era deregulation package could unlock close to $2.6 trillion in new lending capacity for U.S. banks and roughly $140 billion in freed-up capital for the biggest lenders alone, according to its Bank Deregulation Primer 2025 report.
That is the frame I would put on May 22’s announcement. The Fed and FDIC did not just hand the country’s biggest banks a clean grade. They removed one of the last lingering regulatory restraints from the previous review cycle, right as a new chair takes office promising to keep the deregulation push moving.
The departure of dissenting voices like former Fed Governor Stephen Miran only smooths the path.
What bank deregulation means for your wallet and your portfolio
For shareholders, the read-through is straightforward. Bigger buybacks and higher dividends are coming. Lending should loosen. Big-bank earnings power expands.
For consumers, the picture is more complicated. Looser capital rules tend to translate into more credit availability, especially for housing, small business, and middle-market loans. That can help borrowers frozen out of the system since 2022. The trade-off is that the financial system runs with thinner cushions if something cracks.
Senator Elizabeth Warren has been the loudest voice flagging that risk. “Deregulating Wall Street is always dangerous, but it is especially destructive to do so when the economy already faces serious risk,” according to her June 2025 Senate letter to regulators.
The market is voting with its feet. JPMorgan touched an all-time high in late 2025, and the other big lenders have followed.
The quiet May 22 press release will not make headlines next week. It will, however, sit on the public record as the moment the Warsh-era Fed officially closed the book on the post-2008 living-wills argument and opened the next one.
Related: Investors question Warsh’s future impact on markets
