No proprietary trading for banks

[oildaytrader]

perhaps - but I don't think it was a con - also ready "lecturing birds on flying" - this is an excellent piece of work and explains well how people let the quantatitive analysts convince them they were risking little.

No better than than the average idiot analysing historical data and performance ,hoping his optimised historical performance is going to repeat itself, or the roullete going to repeat itself.

 

[gooseman]

60% of the time it works all the time.

 

[Mr. Charts]

Obama is a grandstander who doesn't really understand investment banking and wants to throw out the baby with the bathwater. His judgement and handling of people and complex situations is poor.
He has proved himself ham fisted in this just as in some other circumstances, like the way he publicly treated the Chinese in that speech at Copenhagen.
He takes too long to make decisions, as in the Afghanistan "surge", and then thinks strength is using a meat cleaver when a surgical scalpel is what is required.
Richard

 

[leovirgo]

I want to know the size of prop trading by deposit taking banks. Can anybody point me where to find it?

If they were to liquidate their holdings, how much will it affect the markets? Dow to see 6000 again?

 

[gooseman]

you needn't worry about that.

GS said something like 15% of their revenue came from "walled off" prop trading.

 

[GladiatorX]

Anyone got a list of the banks this will primarily affect ?

Cheers

 

[virtuos0]

you needn't worry about that.

GS said something like 15% of their revenue came from "walled off" prop trading.

12% to be exact, and 1% for JPMorgan.

I feel like there are several layers to peel back on this one. First of all you need to look at the timing of this. It comes just as Goldman announce Godzilla-style bonuses, and very shortly after the Republican victory in Massachusetts. Call me a cynic but it seems to me that Obama probably had his minions such as Geithner and Volcker draw up a list months ago of 'hardline actions' that could be wheeled out in certain circumstances. I guess they just played the 'damn y'all the voters don't like me much' card.

On top of this I do not believe for one second that this wasn't thoroughly discussed with the likes of GS and JPM. Obama would have asked them, what can I do that will hurt you the least but will appease the electorate? It's pretty clear that getting rid of prop trading is the answer to that puzzle. Even if this had in theory the capability of materially hurting the big banks, it's certain that the legislation itself will have holes in it big enough to drive a Jumbo Jet through, in much the same way that tax legislation has been deliberately left like Swiss-cheese.

I guess the core of the problem is that legislation such as this is always reactionary and never even tries to get at the heart of the problem. It attempts to tackle the problem that just happened, when in reality the next great blowup will no doubt have no relation to the previous one. I could go on writing forever on this as I'm genuinely pissed off, but I know you all have the attention span of a gnat so I'll shut up now.

 

[GladiatorX]

12% to be exact, and 1% for JPMorgan.

I feel like there are several layers to peel back on this one. First of all you need to look at the timing of this. It comes just as Goldman announce Godzilla-style bonuses, and very shortly after the Republican victory in Massachusetts. Call me a cynic but it seems to me that Obama probably had his minions such as Geithner and Volcker draw up a list months ago of 'hardline actions' that could be wheeled out in certain circumstances. I guess they just played the 'damn y'all the voters don't like me much' card.

On top of this I do not believe for one second that this wasn't thoroughly discussed with the likes of GS and JPM. Obama would have asked them, what can I do that will hurt you the least but will appease the electorate? It's pretty clear that getting rid of prop trading is the answer to that puzzle. Even if this had in theory the capability of materially hurting the big banks, it's certain that the legislation itself will have holes in it big enough to drive a Jumbo Jet through, in much the same way that tax legislation has been deliberately left like Swiss-cheese.

I guess the core of the problem is that legislation such as this is always reactionary and never even tries to get at the heart of the problem. It attempts to tackle the problem that just happened, when in reality the next great blowup will no doubt have no relation to the previous one. I could go on writing forever on this as I'm genuinely pissed off, but I know you all have the attention span of a gnat so I'll shut up now.

Virtuous0 - Is this proposal something we should be worried about, if goldman sachs & JPMorgan etc stop market making in for example the Nasdaq, most of the liquidity will leave.
Or is my understanding incorrect?

 

[Benton D Struckcheon]

Just saw this cross the screen, FWIW:

Although the country's largest banks dropped yesterday after President Obama unveiled his plan to limit their proprietary trading activities and size, many regional banks actually rose, CNN Money notes. The regional banks' proprietary trading operations are much smaller proportionally than those of their larger peers. In addition, the regional banks' stocks underperformed last year, suggesting that they may be poised to outperform this year. Finally, the regionals have been benefiting from their acquisition of failing community banks on favorable terms, with the help of the FDIC.

CNNMoney was cited.

 

[oildaytrader]

Its quite clear that the demise of Bear Stearns ,merril Lynch and Lehmans was due to CDOS.

It is clear that they ran their own hedge funds to offload CDOS to pension funds.

http://www.bloomberg.com/apps/news?pid=20601087&sid=amZ.IeL2pJHo

Deals With Hedge Funds May Be Helping Merrill Delay Mortgage Losses

http://online.wsj.com/article/SB119396956371280131.html

Did Goldman sitting on the Rothschild and federal reserve couch , have dumb hindsight on AIG's CDOS i.e stupidity and incompetence?

Were they operating illegally or not?

http://www.wilmott.com/messageview.cfm?catid=16&threadid=70892

Which plonker is saying ,that hedge funds had nothing to do with the CDO and financial bubble?

 

[tar]

Virtuous0 - Is this proposal something we should be worried about, if goldman sachs & JPMorgan etc stop market making in for example the Nasdaq, most of the liquidity will leave.
Or is my understanding incorrect?

As i understand it , it is about directional bets not market making , i guess ...

 

[virtuos0]

Virtuous0 - Is this proposal something we should be worried about, if goldman sachs & JPMorgan etc stop market making in for example the Nasdaq, most of the liquidity will leave.
Or is my understanding incorrect?

As Tar said, as far as I understand it (and the detail is extremely thin on the ground) this wouldn't stop market making activities. Now of course market making often involves taking directional positions in order to offset risk, or alter inventory, so how exactly you would separate that from prop trading in a legal sense will be interesting to see.

Does anyone know if this would mean GS's Global Alpha fund would need to cease operating? I assume it could just be hived off as a separate entity and nothing would change.

 

[trader_dante]

What an irony that Obama wants to fight to save the US taxpayer.

Unfortunately, the ham fisted idiot has just caused the market to sh*t itself and thereby spank spank every single US taxpayer that rode the market down praying for their pensions during the sh*tstorm of 2008 and then thought it would all be alright when we bounced back.

Nice one Obama.

 

[montmorencyt2w]

Obama is a grandstander who doesn't really understand investment banking and wants to throw out the baby with the bathwater. His judgement and handling of people and complex situations is poor.
He has proved himself ham fisted in this just as in some other circumstances, like the way he publicly treated the Chinese in that speech at Copenhagen.
He takes too long to make decisions, as in the Afghanistan "surge", and then thinks strength is using a meat cleaver when a surgical scalpel is what is required.
Richard

I fear that you are right.
I fear that he is a black American version of Tony Blair.
I fear that the law of unintended consequences will triumph here, as nearly always.
I fear that even lefties like me will be yearning for the days of G.W. Bush before the year is out.

 

[virtuos0]

What an irony that Obama wants to fight to save the US taxpayer.

Unfortunately, the ham fisted idiot has just caused the market to sh*t itself and thereby spank spank every single US taxpayer that rode the market down praying for their pensions during the sh*tstorm of 2008 and then thought it would all be alright when we bounced back.

Nice one Obama.

Two ways of seeing this:
1: The market was at fair value before the announcement, this is a good buying opportunity as absolutely nothing will change.

2: The market is hugely overvalued, and is being manipulated by Fed open market operations. This is a buying opportunity as they will not want the negative publicity of a major market crash.

 

[Benton D Struckcheon]

Two ways of seeing this:
1: The market was at fair value before the announcement, this is a good buying opportunity as absolutely nothing will change.

2: The market is hugely overvalued, and is being manipulated by Fed open market operations. This is a buying opportunity as they will not want the negative publicity of a major market crash.

3: China. They upped the reserve requirements on their banks, have done some other things. They're the ones guiding the world economy up and down these days.

 

[oildaytrader]

This proposal would prohibit banks from running proprietary trading operations solely for their own profit and sponsoring hedge funds and private equity funds. How this will change the trading enviroment in the future ?

http://www.bloomberg.com/apps/news?p...d=aGwoMdcKbVFk

http://en.wikipedia.org/wiki/Proprietary_trading

How does anyone stop these investment bankers from using proprietary trading illegally to defraud the institutions?

They have already used proprietary trading as a loophole to create illegal subsidiaries and hedge funds.The sole intention was to defraud institutions with toxic waste.

Read the whole article to understand the relationship of hedge funds set up by investment banks to offload toxic waste.A bunch of smart investment bankers set up a hedge fund, using some of bankers' own money to get the fund started.

http://www.marketoracle.co.uk/Article1444.html.

 

[DionysusToast]

write a complaint letter to the clinton administration.

if you want money from the banks buy shares.

If I was a shareholder of GS, I'd be a bit miffed that the profits were all going in bonuses instead of to the shareholders.

 

[oildaytrader]

What an irony that Obama wants to fight to save the US taxpayer.

Unfortunately, the ham fisted idiot has just caused the market to sh*t itself and thereby spank spank every single US taxpayer that rode the market down praying for their pensions during the sh*tstorm of 2008 and then thought it would all be alright when we bounced back.

Nice one Obama.

What I wanted to hear from you was "I made a load of money from the best shorts for a while"

 

[DionysusToast]

I guess the core of the problem is that legislation such as this is always reactionary and never even tries to get at the heart of the problem. It attempts to tackle the problem that just happened, when in reality the next great blowup will no doubt have no relation to the previous one. I could go on writing forever on this as I'm genuinely pissed off, but I know you all have the attention span of a gnat so I'll shut up now.

Well said, Sir.

The knees of government jerk again