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Obama and the return of Glass–Steagall watch

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    The End of Prop Trading as the Glass-Steagall returns.

    The end of speculation and market destabilisation, the return of a truly free and efficient market. May the world finally prosper!

    It'll be that much harder for trading 'wanabees', anyone reconsidering their career options?
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    (Original post by Prince of Zamunda)
    Won't go anywhere as far as Glass-Steagall. Besides, GS won't be affected by G-S and I doubt Obama would do anything to favour them.
    they will be affected by limits on prop trading though.
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    Obama is thinking about putting a cap on prop trading. But I doubt that firms like GS will be affected. Firms with big retail banking opps will be much more affected. Citi, BofAML... these will be more affected... that is, if this happens at all.... it's still on the drawing boards..
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    (Original post by crazyb)
    The End of Prop Trading as the Glass-Steagall returns.

    The end of speculation and market destabilisation, the return of a truly free and efficient market. May the world finally prosper!

    It'll be that much harder for trading 'wanabees', anyone reconsidering their career options?
    Wrong. And no.
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    (Original post by crazyb)
    The End of Prop Trading as the Glass-Steagall returns.

    The end of speculation and market destabilisation, the return of a truly free and efficient market. May the world finally prosper!

    It'll be that much harder for trading 'wanabees', anyone reconsidering their career options?
    I thought I'd seen some pretty ignorant **** on this board, but that takes the biscuit.
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    (Original post by Prince of Zamunda)
    My point was that the limits on prop trading won't have anything to do with Glass-Steagall like OP is suggesting. I'm sure all the big banks will be affected by the prop trading limits, whatever they turn out to be.
    Doubt it.

    a) The boundary between prop risk and franchise risk is blurry, to say the least.

    b) Banks will find the loopholes etc, whatever they are. You can make a mockery of pretty much any rule if you want to.

    c) No matter what they say, the last thing the administration wants is liquidity running out of the system.

    I suspect you'll get nothing more than a token solution to the problem to appease the populist anger. Much like any of the 'economic solutions' you care to mention over the past 2 years.
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    (Original post by CityMonkey)
    Doubt it.

    a) The boundary between prop risk and franchise risk is blurry, to say the least.

    b) Banks will find the loopholes etc, whatever they are. You can make a mockery of pretty much any rule if you want to.

    c) No matter what they say, the last thing the administration wants is liquidity running out of the system.

    I suspect you'll get nothing more than a token solution to the problem to appease the populist anger. Much like any of the 'economic solutions' you care to mention over the past 2 years.
    Blankfein raised this in his answer to some of the questions from the investigation panel recently. Particularly I think the issue is going to be drafting legislation tight enough that it only limits pure prop trading and not trading undertaken to hedge out the main desk book. Particularly at the recent hearing senators didn't really seem to understand that one reason Goldman was shorting certain instruments was that it was intrinsically long them on the main book.

    Broadly I agree with you, this is likely to have major loopholes - it's essentially hoping to reduce profitability and therefore make the politics less difficult. Bank's prop desks didn't cause the crisis.
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    i hate obama, he ripping the market a new one today. ********. i'm down like 4%. loading up for tomorrow
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    (Original post by toothpick)
    i hate obama, he ripping the market a new one today. ********. i'm down like 4%. loading up for tomorrow
    Indeed, he my well be an ********.
    I trade the markets to make them more efficient - I trade off the misinformed. But I've got to give it to him (Obama) this time and I think Tobin too deserves credit. Front-running, distorting the order book, and rampant, excessive speculation are pure evils. There'll still be plenty of liquidity in the markets, the world will continue to grow and banks wills still rake it in.

    Clamp down on the most socially useless/destroying activities of banks (churning/speculation/prop trading) but it should be business as usual in all other areas for banks.
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    (Original post by crazyb)
    Indeed, he my well be an a**hole.
    I trade the markets to make them more efficient - I trade off the misinformed. But I've got to give it to him (Obama) this time and I think Tobin too deserves credit. Front-running, distorting the order book, and rampant, excessive speculation are pure evils. There'll still be plenty of liquidity in the markets, the world will continue to grow and banks wills still rake it in.

    Clamp down on the most socially useless/destroying activities of banks (churning/speculation/prop trading) but it should be business as usual in all other areas for banks.
    No offence but you sound like an idiot.
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    (Original post by CityMonkey)
    Doubt it.

    a) The boundary between prop risk and franchise risk is blurry, to say the least.

    b) Banks will find the loopholes etc, whatever they are. You can make a mockery of pretty much any rule if you want to.

    c) No matter what they say, the last thing the administration wants is liquidity running out of the system.

    I suspect you'll get nothing more than a token solution to the problem to appease the populist anger. Much like any of the 'economic solutions' you care to mention over the past 2 years.

    I was about to make exactly these points. At the end of the day, all that's going to happen is that bank's will remove the section of their balance sheet which says 'capital for proprietary trading' and merge this pool with 'capital for franchise trading'. Voila. Politicians are all ignorant populists with no idea what they are legislating on.

    And I lost all patience for Obama today. ****** lost me 4.5% today too.
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    It's not looking good for the GS buyside funds though. Perhaps one of the European banks will bid for them.
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    obama's trying to create a mark after everyone ****** him on healthcare. why not **** financials he says
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    Be very surprised if this passes. Has to start with big ideas as anything he put forward would end up being watered down.

    If GS stopped taking deposits would this legislation still apply to them anyway?
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    No but Viniar stated today they are definitely going to hold onto BH status.
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    Fair enough.

    Again, don't think it'll pass (at least not in its current format). Might make Obama a bit more popular though with US public.
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    (Original post by greenyblue_eyes)
    Fair enough.

    Again, don't think it'll pass (at least not in its current format). Might make Obama a bit more popular though with US public.
    Essentially sums up my view of it all.
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    (Original post by ghostrider88)
    I was about to make exactly these points. At the end of the day, all that's going to happen is that bank's will remove the section of their balance sheet which says 'capital for proprietary trading' and merge this pool with 'capital for franchise trading'. Voila. Politicians are all ignorant populists with no idea what they are legislating on.

    And I lost all patience for Obama today. ******* lost me 4.5% today too.
    While it would be hard to disagree with you on this point, what kind of legislation should be imposed? I'm really no expert on all of this, but I think even if we remove all the populism from the debate, there's still an issue to be solved after all and not imposing any new legislation won't be much better than imposing populist legislation.

    I've been to a panel discussion about this in December (one equities trader, one credit guy and an econ prof) and they all vaguely agreed that banks should have higher capital reserves, which scale with size (and hence systemic risk). To me, that just sounds like moving the numbers around a bit. So yeah, what would you do if you were in charge instead of Obama/Brown/etc?
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    I support Obama. Obviously the exact details will have to be thrased out but at least he's doing something concrete. The rest (other politicians) just seem to talk a good game with no real action.

    Some of you are taking issue with Obama. So like the above poster has said, what do you propose? Or you just want things to remain as they are, unchanged and await the next bailout?
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    (Original post by ghostrider88)
    And I lost all patience for Obama today. ****** lost me 4.5% today too.
    well serves you right for still being massively overweight financials then approaching election season following a huge rally with enormous political pressure on banking legislation ... doesn't lend itself to a portfolio full of banks!

    and surely some people saw this stance coming a mile off? it was a pretty weighty speech, democrat or not, but surely inevitable to an extent... (watch us follow suit)
 
 
 
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