Something quite important just happened on Wall Street, and probably not everyone realized the magnitude. U.S. regulators just announced a massive easing of capital rules for large banks, and we're talking about reductions not seen in years.

The Federal Reserve presented its plans yesterday to reform Basel III, and the impact is significant. The country's biggest banks will see their capital requirements reduced by 4.8%. Putting it into perspective, that represents a release of about $117 billion in capital that can now be allocated elsewhere. JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup... all of them are celebrating this.

The interesting thing is that Wall Street has been asking for this for years. After 2008, regulators imposed quite strict restrictions. Now, nearly two decades later, the Fed considers it time to recalibrate. Jay Powell argues that it is a "healthy practice" to review these standards periodically, and he apparently has a point because the board was divided in the vote.

The numbers vary depending on bank size. Medium-sized banks (between $100 billion and $750 billion in assets) benefit more with a 5.2% reduction. Smaller banks, with less than $100 billion, achieve the greatest reduction: 7.8%. This also includes changes in how credit risk is assessed and halving mortgage requirement reductions.

Michael Barr, a member of the Fed Board, was the only one brave enough to say what many think privately. He argued that these reforms are "unnecessary and reckless" and will harm the system's resilience. He estimated that the actual reduction would be 6% when including changes in leverage rules. But he remained in the minority.

So, what does this mean in practice? Banks will have more capital available to lend. Many already returned more than 90% of profits to shareholders last year, so now they will seek to allocate those freed resources to credit and acquisitions. Wall Street is in expansion mode.

What’s interesting is that this will probably put pressure on other markets. The Bank of England and the European Union were waiting to see how the U.S. implemented Basel. Now they will face uncomfortable questions about the competitiveness of their banks if they maintain more restrictive standards.

The Fed says its proposals are consistent with the global Basel agreement, although it recognizes differences to reflect specific characteristics of the U.S. market. It has 90 days for public consultation, but honestly, it seems the path has already been set. Wall Street has won this battle.