Banking regulation expands

What happened: U.S. bank regulators are set to unveil softened capital rules on March 19, potentially freeing up billions for lending and shareholder distributions. Meanwhile, Barclays has tightened lending to vulnerable structured finance counterparties following two high-profile blow-ups. VALT Bank, a digital startup, received conditional approval for a national charter from the Office of the Comptroller of the Currency (OCC).

Market impact: The relaxed capital rules could boost lending and shareholder returns for U.S. banks, benefiting Wall Street and the broader economy. Barclays' move may impact structured finance counterparties, while VALT's approval opens up the digital banking landscape, posing competition to traditional banks.

What to watch next: On March 20, monitor the official unveiling of the revised capital rules and their reception by investors. In Q2, track Barclays' earnings to see if the shadow banking hits have affected its financials. Additionally, watch VALT's progress towards its full OCC charter and its potential impact on the competitive banking landscape.