Good morning. Andrew here. A reversal of fortune is taking place on Wall Street: Banks, which long ago lost their luster to the fast-tracked world of private equity, are having a renaissance. Rob Copeland goes deep on the trend this morning. Plus, DealBook’s Sarah Kessler discusses job losses in an A.I. world with an expert who predicted this shift years ago. Finally, make sure to take our weekly quiz. (Was this newsletter forwarded to you? Sign up here.)
Bankers are back on top
It is a golden moment for banks. Trading profits are at record highs, and so are employee bonuses. Mergers, acquisitions and other deals are piling up at the second-fastest pace in at least a decade, producing billions of dollars in fees. And after they operated for nearly two decades in what one banker described as a regulatory “straitjacket,” the Trump administration is making it easier for banks to expand and take more risks. “The stars are aligning for banks in a way that hasn’t been seen in multiple decades,” Citi analysts wrote in a research note this month. The good times for banks represent a flip of fortunes. Since the 2008 financial crisis, Wall Street’s biggest paydays have been earned by private equity and private credit firms, making often high-risk investments with the promise of high returns. Lately, many of those private equity firms have struggled to raise money as the industry has delivered lackluster investment returns. At the recent Milken Institute Global Conference in Los Angeles, a confab popular with the private equity set, the chief executive of one giant investment firm compared the vibe, with some hyperbole, to the final days of Sodom and Gomorrah. It’s also a tenuous time for many international businesses, with airlines going bankrupt, global ship traffic choked, inflation on the rise and artificial intelligence roiling industries. Many banks, by contrast, have followed the trajectory of Citizens Bank, a once sleepy Providence, R.I., institution that has been expanding rapidly, and seen its share price rise by more than 50 percent over the past year. “I feel great,” said Bruce Van Saun, Citizens Bank’s chairman and chief executive. Citizens has been acquiring smaller specialist firms that are helping it to capitalize on a Trump-encouraged boom in corporate deal making, hiring up swaths of financial advisers that cater to the global well-to-do and opening up branches in wealthy neighborhoods. Banks are insulated from many current macroeconomic pressures, increasingly catering to richer customers, whose wealth is largely tied up in a stock market that keeps hitting records despite the fighting in the Middle East. In fact, the swings in oil prices and volatility in other markets caused by the war are benefiting the banks’ trading volumes, which brings in more fees. In the first quarter alone, nearly $50 billion in trading revenue flowed to the six biggest banks in America, including JPMorgan Chase and Citi, a record high. “It’s interesting to see,” Matthieu Wiltz, co-chief executive officer for JPMorgan in Europe, Middle East and Africa, recently told Bloomberg Television, “that, for I think the first time, we have such a big conflict with limited impact on the market.” Last week, JPMorgan announced that balances in its “prime brokerage,” which executes trades for wealthy clients, were at an all-time high. Deals are also making a comeback after several sluggish years during the Biden administration, when mergers and acquisitions came under intense antitrust scrutiny. Big-money corporate deals are booming, as the Trump administration waves through company tie-ups and, increasingly, encourages them directly. And after a yearslong fallow stretch for initial public offerings — the business of listing privately held companies on stock exchanges — banks are salivating at the prospect of billions of dollars in commissions from offering shares in private companies including SpaceX and the A.I. giants Anthropic and OpenAI. The good times are encouraging the newest generation of bankers. In past years, said Mr. Van Saun, the Citizens chief executive, new college graduates would join banks and almost immediately begin applying for jobs elsewhere — a pattern that became known as “two and out,” a reference to the mass resignations by junior bankers after two years. Often, those young bankers were taking jobs at hedge funds, at technology firms, in venture capital or in pretty much any other career more exciting or remunerative. But now many young bankers are taking a look at what Mr. Van Saun calls “the travails” outside banking and increasingly staying put. Banker pay is rising, too. Alan Johnson, founder of a namesake Wall Street pay consultancy, projects that investment bank employee bonuses this year will be 10 to 20 percent higher than in 2025, when New York’s finance set pulled in $49.2 billion in collective bonuses, with securities industry employees earning an extra $246,900 on average. Mr. Johnson contrasted the imminent banker windfall with private equity pay, which he compared in many instances to “a lottery ticket that won’t be worth anything.” “It is the year of the bank,” he said. Although bankers are ebullient, that could change again. One generator of the banks’ record profits are layoffs and attrition brought on by increasing uses of A.I. Last week, the president of Goldman Sachs predicted in a television interview that he would replace his firm’s “human assembly line” with digital agents. And much of the wind behind the banking industry can be traced to ever-fickle Washington, where securities enforcers have dialed back scrutiny of everything from antitrust issues to crypto. The Fed, the main bank regulator, has proposed easing the annual “stress tests” that banks are required to undergo. It also suggested that a core safety backstop, known as capital requirements, be slashed by around 5 percent for the largest banks and more for smaller ones. Even that modest change could mean billions more in lending. Bank executives say that would free them up to make more loans — to individuals through mortgages and credit cards, to other Wall Street firms in areas like private credit or to finance sweeping construction projects like A.I. data centers. But less regulatory scrutiny necessarily requires faith that the industry will police itself, noted Anat R. Admati, a professor at the Stanford Graduate School of Business who co-wrote a book warning of escalating problems in the banking system since the financial crisis. “I don’t think anyone has a clue how much risk is being taken,” she said.
A.I. job anxiety took center stage. Meta laid off 8,000 people, or 10 percent of its work force, as part of a plan to remake itself for the A.I. era. The C.E.O. of Standard Chartered drew criticism for saying A.I. would replace “lower-value human capital.” Graduates booed commencement speakers who brought up A.I. And California Governor Gavin Newsom directed officials to study the idea of providing universal basic capital to workers displaced by A.I. The Elon Musk vs. Sam Altman rivalry moved to the I.P.O. market. On Monday, a jury in Oakland, Calif., rejected Musk’s $150 billion lawsuit against OpenAI and its C.E.O., Altman. On Wednesday, Musk’s company, SpaceX, filed its much-anticipated S-1 in advance of what could be a record I.P.O. in June. But OpenAI stole some of SpaceX’s thunder when news broke that the ChatGPT operator is targeting its own I.P.O. as soon as September. President Trump’s high-volume stock trading raised eyebrows. Reporters asked questions after a disclosure revealed that Trump or his advisers had made more than 3,600 stock trades in the first quarter of 2026. Vice President JD Vance defended Trump’s heavy trading. More big deals: Kevin Warsh was officially sworn in as chair of the Fed yesterday at the White House, and must now confront rising inflation. Tulsi Gabbard resigned as the U.S. director of national intelligence, citing the need to support her husband after a cancer diagnosis. The 30-year Treasury yield hit its highest level since just before the global financial crisis.
Rise of the robots, againWhen Meta laid off 8,000 employees this week and reassigned an additional 7,000, it prompted a new wave of concern about how much artificial intelligence could upend the labor market. Martin Ford warned about this moment more than a decade ago, in his best-selling book “Rise of the Robots: Technology and the Threat of a Jobless Future.” Ford will rerelease the book next month with a new chapter on artificial intelligence. Sarah Kessler talked with him about what has — and hasn’t — changed since he first started documenting the effect of technology on jobs. What was the reception to the book like in 2015? Did people believe robots would be coming for their jobs? Everyone was very interested in the topic and kind of fascinated with the idea that this might happen, but of course there wasn’t a level of concern that we have now. Has anything surprised you about how automation played out over the last 10 years? Like almost everyone else, I was amazed the first time I saw ChatGPT. I honestly had a different vision of it. I thought A.I. systems would be built to do some very specific thing like automating legal work or automating financial analysis, but it has turned out that with the advent of these L.L.M.s, we really got a kind of general intelligence. I often hear the argument that A.I. will be like every other technological development that did not result in mass unemployment. How do you usually respond to that argument? It depends on your capabilities and the kind of work that you’re doing. These systems are going to get better and better and better. So it’s entirely possible that for some time they will complement workers. But then there’s going to become a tipping point where they’re going to start substituting for a great many more people. What do you think is the best argument that A.I. will not result in mass unemployment? There are a couple of ways that I could be wrong about this. One is that the technology never reaches the point where it can literally displace human workers, which is, I think, kind of a strange argument to make. All the evidence suggests that progress is going to be relentless. But if that happens, then there will be a slowdown, a plateau, but ultimately new ideas will come forth and progress will continue. That’s always the way it works. The other is that there’s an economic theory that says that human beings are in some sense indispensable to the production side of the economy. I just don’t believe that. But there are economists that seem to believe that, so maybe it is true. Gov. Gavin Newsom of California on Friday signed an executive order to explore safeguards for workers as A.I. takes over more work. You’ve been a proponent of Universal Basic Income. Is there a specific funding mechanism that you have in mind? A robot tax? In general, labor is going to be devalued and all of the returns are going to go to capital, to ownership of machines, data centers. So we need to shift our taxation scheme away from what we do now, which is very heavily tax labor, and shift it more to capital. I don’t know that a specific robot tax is the best approach, because how do you define exactly what is a robot? It could be software, it can be hardware. So my suspicion is that it’s better to go with a broader tax just on more leverage on capital. What do you think the A.I. shift means for the economy overall? We’ve got a lot of techno optimists in Silicon Valley making these, I think, kind of insane projections that advanced A.I. is going to make the economy grow at 20 or 30 percent. I believe for sure that A.I. has the potential to be positive in terms of scientific progress and breakthroughs. But if it really begins to have a big impact on jobs, that’s a very, very strong headwind. This idea that you’re going to have an economy growing at 20 percent while at the same time, lots of people are losing their jobs doesn’t make a lot of sense. You can’t have an economy if no one can buy anything.
Quiz: Search box remixFew artifacts of the internet have remained as consistent, for as long, as the Google Search Box. More or less the same shape since 2001, the box has maintained its basic functionality as a space to type in topics, and more recently, complex questions. But as with so many things, the advent of artificial intelligence has triggered a major redesign. On Tuesday, Google announced all of these changes to the Search Box, except for one. Which did it not announce? We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times. Thanks for reading! We’ll see you Tuesday. DealBook is off for the Memorial Day holiday. We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.
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