Doesn't GS make most of its profits through prop trading?
I just read that they are shutting down this unit. What will they do now?
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That news is about 2 months old, and even older considering that we all knew it was coming after the obamacare-finance version was passed.
Having said that, the prop trading absence will certainly hurt the bottom line, but that's true everywhere.
There is still that whole investment bank thing they do, brokerage (sales-trading, can still use firm capital in this capacity without it being a prop trading operation, per se), asset management, etc...
I remember reading an article when this was all coming out about this. Point of the article was that getting rid of the prop trading desks meant very little in reality-banks can work around the new rules easily by doing the trading through their S&T operations.
It's to comply with the Volcker Rule. A few other banks like JPMorgan and BAML are planning to do the same thing. JPM is said to close down its commodities prop trading desk a few weeks (months) back.
Prop trading accounted for about 10% profits for GS. They will simply move prop traders onto market making desks and have them take positions using some of the desks capital allowances.
I thought it was much more than that?
http://www.bloomberg.com/news/2010-09-03/goldman-said-to-shut-principal…
Whatever happened to spinning GSPS off and funding it with seed money from GS?
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