One impetus for that stance was a white paper the Treasury Department released last week containing its recommendations to ease bank regulation. While the paper largely got lost in the headlines of the Las Vegas mass shooting and the daily drama coming out of Washington, it was viewed within the banking industry as an important sign of a more relaxed environment to come.
Among other things, the Treasury recommendations are “aimed at both decreasing the burden of statutory stress testing and improving its effectiveness by tailoring the stress-testing requirements based on the size and complexity of banks.”
Generally, they call for evaluating mandates, looking at how the sector can help the economy, “reducing regulatory burden by decreasing unnecessary complexity,” and getting financial regulators to work together with less duplication.
“Actions thus far are not enough to impact estimates; they are sufficient to support a more optimistic bias, and perhaps all the more so with the confirmation of Randal Quarles as the Fed’s vice chairman for supervision last week,” Katzke wrote.
Big banks will report earnings this week, with JPMorgan Chase and Citi on top Thursday and Bank of America, PNC and Wells Fargo up Friday. Financials broadly are expected to show annualized growth of 4.3 percent, though that number has been slashed from the 10.1 percent originally expected, according to FactSet.
WATCH: Analyst Mike Mayo talks about the future of bank regulation.