The Quiet Deregulation of Banking Has Begun

Northern Trust also highlights a growing shift in US banking regulation, where policymakers are beginning to ease post-2008 constraints in response to the explosive rise of private credit markets. 

• Federal Reserve officials are considering softer capital requirements and lighter supervisory standards for banks, particularly around lower-risk lending.
• The rise of private credit — now estimated at roughly $1.6 trillion — emerged largely because stricter post-crisis banking regulations pushed riskier lending outside the traditional banking system.
• Policymakers increasingly worry that excessive regulation weakened banks’ competitiveness while allowing non-bank lenders to dominate corporate credit markets.
• Northern Trust suggests the reforms could slowly reopen credit creation within the regulated banking system, though new financial risks may only emerge years later.

There is a cyclical irony underneath the debate: every financial crisis produces tighter rules, and every long expansion eventually produces pressure to loosen them again.