It never fails when we have a crisis in America. The tendency for the governing or regulating bodies isn’t to try to get things from over-exuberant back to the mean, it’s to over-regulate, so it can never ever happen again. While that always seems like a good solution at the time, it is usually so stifling that in the normal course of events, transactions and business can be bottlenecked for years.

A new Merrill Lynch research report makes the case that some regulatory relief is possibly on the way, and the resignation in April of this year of Fed Governor Daniel Tarullo, who is said to be the de facto head of bank supervision, could pave the way for an improved administration of the Comprehensive Capital Analysis and Review (CCAR) process. The analysts also feel this could free up some of the tremendous amount of capital the banks are forced to hold. In fact, they estimate that there is as much a $230 billion in what they call “dead weight” capital from the CCAR process.

While two banks immediately hit the Merrill Lynch screens as possible winners from the rules changes, only one is ranked Buy at the firm. We suspect this would to a large degree help all banks, so we screened the Merrill Lynch research database for the large money center banks also rated Buy.

Citigroup

This is one of the banks that Merrill Lynch feels could benefit among the most if the CCAR is modified. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

Trading at a still very cheap 10.9 times estimated 2018 earnings, this company still looks very reasonable in what is becoming a pricey stock market. A continuing stock buyback program at the bank is a positive, which could be increased if some of the restrictions were relaxed. While fourth-quarter results were generally in line with estimates, management was conservative looking forward and some were disappointed.

Citigroup investors receive a 1.2% dividend. The Merrill Lynch price target for the stock is $64. The Wall Street consensus price objective is $64.61. Shares closed most recently at $59.90.

JPMorgan

This stock trades at a still low 11.8 times estimated 2018 forward earnings and could respond good in a rising rate scenario. JPMorgan Chase & Co. (NYSE: JPM) is expected to continue to benefit from commercial loan growth and an upturn in capital spending. Wall Street analysts agree that the stock seems attractively valued on estimated price-to-earnings and a very solid price-to-book value. Some on Wall Street have cautioned that last year’s divestiture of the physical commodities business could provide earnings headwind going forward.

With $2.6 trillion in assets on a worldwide basis, and one of Wall Street’s savviest leaders in Jamie Dimon, the stock is a solid buy for investors. Last year, Dimon put his money where his mouth was and bought a stunning 500,000 shares of the stock for a massive $26 million.

The company reported solid fourth-quarter results that came in a touch above estimates. The analysts feel the company is able to take advantage of revenue opportunities while still improving efficiency. The firm’s forward estimates are above current Wall Street expectations.

JPMorgan investors receive a 2.5% dividend. Merrill Lynch has a $95 price target, and the consensus target is $89.21. The shares closed Monday at $88.24.

Wells Fargo

This is another stock for investors to look at now for safety, dividends and solid upside potential, and the large cap bank is also a top sector pick at Merrill Lynch. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. The company provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking. It also has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.

Wells Fargo has slowly, but surely, become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line and overall revenue. The stock also remains a top Warren Buffett holding, and he raised his holdings in the bank to 10% on the stock’s weakness last year.

The stock had a public relations headache last year when it was revealed that employees allegedly opened up client accounts that were not approved. Things got even worse when the chief executive was absolutely eviscerated by politicians at a congressional hearing and he ended up resigning. While the stock has rallied off the lows, it remains probably the most affordable of all the major banks.

Though fourth-quarter numbers initially disappointed, the primary cause for this was a one-time charge of $592 million linked to its interest rate hedges. On the bright side, the bank’s net interest revenues reached a record high, while its push into wealth management and card lending continued to drive fee incomes.

Wells Fargo shareholders receive a 2.66% dividend. The $65 Merrill Lynch price target is well above the consensus target of $58.15. The stock closed Monday at $56.86.

Bank of America

Bank of America Corp. (NYSE: BAC) posted very solid fourth-quarter results, and the overall trend for the company looks very solid for 2017. While not covered by the Merrill Lynch, as the bank owns the firm, the company is also expected to benefit from the potential looser regulation and higher interest rates.

Bank of America is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers, online and mobile banking platform.

The company is one of the larger lenders to the oil and gas industry, and it told analysts earlier this year that it had set aside more money for coverage of loans to the industry that may go bad. Overall credit quality remained strong, while consumer portfolios continued to improve and commercial portfolios remained stable with energy improving. The equity and debt trading at the firm helped boost bottom-line results.

Investors receive a 1.28% dividend. The consensus price target is $24.86, and shares closed Monday at $23.40.

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It should be noted these banks have had huge runs since the election, and it would make sense to scale buy shares over, say, the next three to six months to avoid buying right at the very top. Some sort of correction over the next 90 days seems entirely possible.

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