Wall Street bankers launched a "battle of revenge," signaling the end of the golden age for alternative asset managers.

The head of a giant Wall Street bank once had dinner with a buyer competitor, who casually referred to the bank as a "utility company". The CEO felt the most painful part was that this was not an insult, the other person was simply stating a fact. However, by the end of 2025, this arrogant attitude is starting to shift. Over the past decade, as alternative asset management companies invaded their territory, bankers had been gritting their teeth, but now they are optimistic about the next few years - they claim that regulation and market conditions are turning in their favor. Shareholders are betting on this: the six giants of Bank of America Corp industry - JPMorgan Chase (JPM.US), Bank of America Corp (BAC.US), Citigroup (C.US), Wells Fargo & Company (WFC.US), Goldman Sachs Group, Inc. (GS.US) and Morgan Stanley (MS.US) - have seen their average stock prices rise by more than 45% this year. In comparison, the stocks of the four major listed alternative asset management giants - Blackstone, Apollo Global Management Inc, KKR, and Carlyle Group Inc - have declined overall, with only Carlyle Group Inc achieving significant growth. This marks the strongest supercession of traditional lending institutions in a generation. "It's the banks' revenge," said Mike Mayo, an analyst tracking other major lending institutions at Wells Fargo & Company. "For the past 15 years, banks have been competing with non-bank institutions as if playing basketball with one hand tied behind their back. Suddenly, the banks can now compete with their opponents with both hands. It's a sense of relief." The performance of large U.S. bank stocks has hit a record high, far surpassing other stocks. This observation on industry competition is based on conversations with executives from several large Wall Street institutions. Almost everyone requested to remain anonymous in order to speak candidly about government regulatory agencies and competitors. What pleases bank leaders is that the second Trump administration is reducing restrictions that were put in place after the financial crisis by the Federal Reserve and other regulatory agencies, including proposed capital rules and stress tests. These rules have long been derided by the industry as misleading and costly - but many outsiders believe that these restrictions were necessary after the taxpayer-funded bailout in 2008. A less controversial point is that this strict regulation has cleared the way for buyer companies to enter the most profitable loan areas. While banks carefully scrutinize borrowers and tend to favor the safest loans with the lightest capital burden, asset management companies have raised hundreds of billions of dollars to make faster financing decisions - often charging higher interest rates on the basis of convenience to applicants. Blackstone and Apollo have become giants in the private credit sector. As of September, Blackstone's credit and insurance assets (a measure of its funded financing) exceeded $432 billion, an increase of 67% from the end of 2021. At Apollo, assets under credit management (AUM) rose 83% to $723 billion during this period. Bankers admit that time cannot be turned back: large private market companies have now become entrenched lending competitors, occasionally also partners with banks. They are deepening their penetration into asset-backed loans and other traditional banking territories. And the potential returns in the buyer market are still more lucrative, attracting many of the top traders and matchmakers away from banks. But in recent quarters, large banks are starting to demonstrate their lending strength after repelling a series of regulations. They thwarted a proposal for stricter capital requirements called "Basel III endgame" in the Biden era. They also received some breathing room on other regulatory pressures, which had forced them to hold more capital, including special limits on leverage of their balance sheets by the Fed and stress tests. There have also been some individual breakthroughs that have given the industry more leeway in providing leveraged loans and handling cryptocurrency. Even a regulatory agency - the Consumer Financial Protection Bureau (CFPB) - has undergone significant downsizing. As regulations ease, top banks have expanded their lending portfolios at the fastest rate since the financial crisis. JPMorgan Chase, which had just moved into its new headquarters worth billions of dollars, is spending heavily. In May, it led an $80 billion financing for 3G Capital to acquire Skechers U.S.A., Inc. Class A. A month later, the bank agreed to provide $17.5 billion to help Warner Bros explore a split. In October, it provided $200 billion for EA's acquisition, the largest commitment by a single bank for a leveraged buyout at that time. This month, as Netflix began raising funds for its bid for Warner Bros, Wells Fargo & Company pledged to provide $29.5 billion in bridge loans. In short, the results are that the top commercial banks have collectively increased their lending volumes in recent quarters, narrowing the gap with private credit competitors. In mid-2024, few could have predicted such a turnaround, when Apollo CEO Mark Rowan had firmly believed that the lending accounts of banks were opportunities for private credit, which annoyed the banks. But for alternative asset management companies, some of Trump's signature policies ultimately hindered rather than helped their core businesses. His tariff policy impacted certain private equity investment partnerships and reignited inflation concerns, leading the Fed to be unwilling to cut rates quickly. This has kept financing costs high for a longer period, making it more difficult to divest old assets and raise new investment funds. At the same time, the growing influence of alternative investment giants' credit divisions has come under more scrutiny from authorities. Last month, a key official at the Department of Justice expressed concerns about asset managers potentially misvaluing their private equity and credit assets. In the UK, officials even began testing how the industry would react to financial pressures. Previously, the collapse of subprime auto lender Tricolor Holdings and auto parts company First Brands Group had sparked market concerns that corporate borrowers were abusing competition among lending institutions and were suspected of fraud. JPMorgan Chase CEO Jamie Dimon's prediction of more credit "cockroaches" caused a sensation. While banks were at the center of these setbacks, investors sold stocks of alternative asset management companies with significant exposure to private debt. By autumn, when Rowan complained at an investor presentation that concerns about private credit were exaggerated, bank leaders privately commented that lending finally felt "fun" again. JPMorgan Chase is close to achieving the highest annual profit in Bank of America Corp's history. The Fed lifted the asset cap it imposed on Wells Fargo & Company seven years ago due to consumer abuse. Even Citigroup, a laggard after the 2008 crisis, saw its stock price rise above book value again. The extent of the shift in fate between banks and private equity companies has been so great that bankers are beginning to crack down on the one thing they hate most: poaching talent. Over the years, private equity firms have been relentlessly recruiting junior bankers for so-called "cycle in" positions that Morgan Stanley new hires even skipped training sessions in the summer to answer calls from potential employers for the next job. Morgan Stanley warned incoming analysts that they would be fired if they accepted future job invitations from other companies within 18 months of joining or after joining. Soon, other banks followed suit - even large private equity firms began to compromise and cooperate.