Banks are dominating Wall Street in 2026 as trading profits hit record highs and M&A deals pile up at the second-fastest pace in a decade. After nearly two decades under regulatory constraints, banks now benefit from Trump administration policies easing restrictions on expansion and risk-taking. Citigroup analysts describe this as "the year of the bank," as banks reclaim top position from private equity that dominated post-2008 finance.

The banking resurgence contrasts sharply with private equity's struggles to raise money amid lackluster returns. Investment banking bonuses are projected 10-20% higher than 2025's record $49.2 billion total. JPMorgan Chase reported all-time highs in prime brokerage balances, while trading revenue for the six biggest banks reached nearly $50 billion in the first quarter alone. Young bankers are increasingly staying put, reversing the "two and out" trend.

Despite the boom, banks face headwinds from AI-driven layoffs and increased risk-taking. Goldman Sachs's president predicts replacing the "human assembly line" with digital agents. Regulatory rollbacks, including proposed cuts to capital requirements, have raised concerns about self-policing. Stanford professor Anat R. Admati warns that "no one has a clue how much risk is being taken" as scrutiny diminishes.