Now, on to the main event…

It’s been nearly two decades since Washington regulators have allowed the big Wall Street banks to conduct transformational mergers. That may be about to change for the first time since the Federal Reserve, the Treasury, and the New York Fed approved—encouraged, even—the fire sales of Bear Stearns to JPMorgan Chase and Merrill Lynch to Bank of America more than 15 years ago. Remember those?

There’s basically been no big-bank M&A since the Fed designated many of them SIFIs, or significantly important financial institutions, in the wake of the Great Recession. Sure, there have been a few bank-related deals in recent years. In 2019, SunTrust and BB&T, two regional Southern banks, merged to form Truist in a $66 billion deal. PNC and U.S. Bancorp, two other regional banks, have also done deals. And earlier this year, Capital One and Discover Financial merged to create one of the largest credit-card companies. Just last week, two other Southern regional banks, Pinnacle Financial Partners and Synovus, announced an $8.6 billion merger agreement. And on Wednesday, Evercore, the boutique-ish investment bank, announced it was buying the tiny U.K. M&A shop Robey Warshaw, for $196 million, or about $40 million for each of its five partners. (Not quite what Meta is paying for A.I. talent, but not nothing.)

But the Trump administration is all about loosening regulations on just about everything (except, apparently, law firms, universities, and vaccines). “After four years of stricter regulatory posture under the last administration, the tone from new regulators has shifted in favor of more bank M&A,” Manan Gosalia, an equity analyst at Morgan Stanley, wrote on July 25. Indeed, the new Fed vice chair for supervision, Michelle Bowman, has signaled in several speeches that she’s willing to be more flexible when it comes to Wall Street bank mergers. In a June speech shortly after she was appointed, Bowman said, “The goal of banking regulation should not be to eliminate all risk from the banking system.” Imagine uttering that in 2010.

No surprise, some Wall Street C.E.O.s are making noise about M&A deals for the first time in years. A few weeks ago, during Goldman’s second-quarter earnings call, the highly respected Wells Fargo bank analyst Mike Mayo asked Goldman C.E.O. David Solomon what, if anything, was on his plate when it came to M&A plans. Solomon was naturally reluctant to get into the details, especially on a public call, but he did allow that Goldman would consider deals that would enhance its wealth and asset management businesses. “We’re looking for opportunities to continue to scale and grow the positioning of that asset management platform,” Solomon said. “It’s a $3.3 trillion platform. It’s very broad and diverse in what it does, but there’s certainly opportunities to accelerate our scaling in certain places.”

Goldman, which has honed a very insular culture over 156 years, has a notoriously poor track record of integrating the few acquisitions it has consummated. Big failures include Spear, Leeds & Kellogg, a securities clearing firm, and J. Aron & Company, a commodities trading firm—although that acquisition did bring into the firm both Lloyd Blankfein and Gary Cohn, who steered Goldman brilliantly through the 2008 financial crisis.

In the wake of Solomon’s comments during the call, Semafor reported that Goldman had held “takeover talks” with Northern Trust, a $1.6 trillion asset-management firm based in Chicago, with a market capitalization of $25 billion. Mike O’Grady, the Northern Trust C.E.O., quickly shot down that reporting. “Contrary to recent speculation, during my tenure as C.E.O., we have never entertained discussions regarding the sale of the company with any financial institution, nor do we intend to,” he said. But clearly there’s something in the water.

Bowman, one of two Fed governors to vote against Jay Powell’s decision to hold rates steady at the Federal Open Market Committee meeting this week, is emblematic of the somewhat Trumpy feeling percolating through the regulatory environment these days. In her June speech, she said she was open to reforming the supervisory rating mechanics that are used to evaluate big-bank mergers, such as by reducing unnecessary disqualifications. She’s also in favor of accelerating the deal-approval process. “Our goal should not be to prevent banks from failing, or even eliminate the risk that they will,” she said. No wonder “Miki” is on various shortlists to succeed Powell.

In any case, now would be as good a time as any for Goldman to make a big move. Not only do regulators seem more quiescent, but Goldman’s stock is trading near all-time highs—up 45 percent in the last year. (Goldman now has a market cap of $225 billion, only $6 billion less than Morgan Stanley, which has long been worth at least $20 billion more than its rival.) As loyal Dry Powder readers may recall, I’ve long been an advocate of Goldman Sachs acquiring Bank of New York Mellon: It has no investment banking business, so there’s no concern about overlap, which would be an issue with almost every other big-bank deal Goldman might consider.

It also owns Pershing, the big trade-processing business, which is the kind of thing Solomon likes. And, of course, it owns Mellon, the huge institutional asset-management business, with some $2.1 trillion under management. That would be an incredible fit with Goldman, and perfectly in line with David’s stated M&A goals for the firm. Bank of New York also has a small loan portfolio—less than $50 billion—composed largely of loans made to its private wealth management clients. What’s more, Robin Vince, the C.E.O. of Bank of New York Mellon since September 2022, spent 26 years at Goldman Sachs.

In my humble opinion, the combination is kind of a no-brainer. But it’s not without risks. (This is not investment advice.) BNY Mellon has a market cap of $71 billion, up 56 percent in the past year. That would be a massive bite for Goldman, and about 10x the size of its previous largest deal, Spear Leeds—which flopped, and flushed some $6.5 billion down the drain. In that light, a Goldman Sachs–BNY Mellon merger might be a bridge too far for David and his board, even if Robin and his board might be amenable.

Still, doesn’t Goldman have to do something one of these days, if only to prove to Wall Street that it can do a big deal and make it work? Can Goldman continue to allow Jamie Dimon and JPMorgan Chase to run the table on Wall Street? With a market cap of $830 billion, it’s well on its way to becoming the first bank worth $1 trillion.

C’mon David, be a Wall Street legend. Unlike Jamie, you’ve got succession solved. You’ve vanquished internal dissent. Your stock is booming. You’ve said you want more wealth management assets; BNY Mellon gives you that—and Pershing, too! Regulators are flashing the green light for the first time in nearly two decades. When the ducks are quacking, you have to feed them.

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