Monkeys,
Lets say the financial reform bill passes.
You have two kinds of Bulge Bracket Banks, banks like Citi and B of A, JPM, that are primarily Commercial, traditional banks....JPM with probably the most capital coming from the IBanking side. These are banks that you deposit your check in, pay your bills out of, own your home; amongst other things.
Then you have GS. I would imagine that 60-70% of their billions comes from what the reform will ask a bank interacting in "Commercial Banking" would be forced to end.
So why would GS/CS/DB/MSML eliminate Prop trading, private equity, etc. all this stuff that is bringing in the majority of their capital?
Does anybody think that a bank like GS will cut the commercial side of their business, sell it off to say...Citi, and Citi would sell of their prop trading/Private Eq divisions to GS?
What do you think?
I personally think this is a great opportunity for Wall Street and American Tax Payers....let's not destroy IBanking as a division and career, lets separate Client side from Proprietary side.....
I think this reform could be a great thing for America IF it takes on this form...as far as what trading derivatives only on market will do for.....I don't think it'll be substantial.
This reform could create more purely Investment Banks (say GS) twice, or three times larger than they currently are if all their competitors sell their Ibanking divisions off to pure "I Banks". Conversely, banks like Citi and BofA will become pure commercial banks.
A bank like PNC could buy off Goldman's commercial banking and a grow, and vice versa......this will also be great for HF, prop shops, etc, which isn't bad for Wall Street. Remember the hay-day of wall street (arguably the '80's arguable the reason we are in this mess) existed BEFORE commercial banks and investment banks were one.
