Core Viewpoint - The recent proposal by the Federal Reserve to relax capital requirements for large Wall Street banks has led to a significant increase in bank stock prices, indicating positive market sentiment towards the banking sector [1] Group 1: Market Reaction - U.S. bank stocks experienced a broad rally, with Goldman Sachs (GS.US) and Morgan Stanley (MS.US) rising over 3%, while JPMorgan Chase (JPM.US) and Citigroup (C.US) increased by over 2%, and Bank of America (BAC.US) rose nearly 2% [1] Group 2: Regulatory Changes - The Federal Reserve has presented a revised version of the Basel III final rules, which is expected to significantly lower capital requirements for large banks, with estimates suggesting a capital increase of only 3% to 7%, compared to the previously proposed 19% for 2023 and 9% from last year's compromise [1] Group 3: Capital Position of Banks - As of the second quarter of 2025, large banks are projected to hold $157 billion in excess capital, and even with a potential capital requirement increase of 7%, they would still retain at least $146 billion in excess capital [1] - The adjustment of subsequent capital rules, such as GSIB surcharges, SLR, and stress test transparency, may further enhance the capital adequacy of banks [1] Group 4: Impact on Specific Banks - The reduction in capital requirements is particularly beneficial for banks with large trading portfolios, with Goldman Sachs being highlighted as a key beneficiary of this regulatory change [1]