Wednesday, October 12, 2011

Goldman Sacs and Morgan Stanley may drop Bank Status

Volcker rule invoking change for the better?

Goldman Sacs and Morgan Stanley may consider dropping their status as bank holding companies to avoid expenses tied to the Volcker rule, said David Hilder an analyst at Susquehanna Financial Group LLP.
The rule in its current form would impose costs on lenders and drive capital to non-bank market makers, causing the two New York-based firms to consider whether to stop being banks, Hilder said in a note yesterday, when four regulatory agencies issued a 298-page draft of the rule for public comment.

“The regulators have proposed a massive new compliance burden on banks to prove that their market-making activities are just that, and not proprietary trading in disguise. If these regulations are adopted in anything close to their proposed form, there will be large additional costs imposed on banks as market-makers that will not apply to market-makers not owned by banks."

Read the full article here

Goldman Sac's getting shoved around? This brings back memories of Alessio Rastani on BBC.  I don't think trader Alessio Rastani would agree. "Goldman Sacs Rules the World"