2026 is shaping up as the year banks reclaim Wall Street's spotlight. Trading profits hit record highs, employee bonuses are climbing, and deal flow has reached its second-fastest pace in a decade. After nearly two decades of regulatory constraints, the Trump administration is loosening oversight, freeing banks to expand and take on more risk. Citi analysts called it a setup that hasn't been seen in multiple decades.

The turnaround is stark. Private equity and hedge funds dominated Wall Street paydays since 2008, but those firms now struggle to raise capital as returns lag. Meanwhile, the six biggest U.S. banks booked nearly $50 billion in trading revenue during the first quarter alone. Citizens Bank saw its share price climb more than 50 percent over the past year by acquiring smaller firms and hiring financial advisers.

Banker bonuses are projected to rise 10 to 20 percent over 2025, when the New York finance set collected $49.2 billion in collective bonuses. Goldman Sachs is already preparing to replace its human workforce with digital agents, which threatens the human capital behind these profits. Young bankers are also staying put after years of fleeing to hedge funds and tech companies.

Less regulatory scrutiny and geopolitical chaos that boosts trading volumes are driving the windfall, but that same dependency makes the gains fragile. Professor Anat Admati warns that no one has a clear picture of how much risk banks are actually taking.