Mystery of Disappearing Prop Traders - Michael Lewis

[Joy Pathak]

The Mystery of Disappearing Proprietary Traders: Michael Lewis - Bloomberg


In the run-up to the vote on the financial overhaul bill, the big Wall Street banks squashed an attempt by Senator Carl Levin to pass a simple ban on any form of proprietary trading.

A Senate staffer close to the process told me the amendment was one of Wall Street’s highest priorities, spreading money around to exert as much pressure as possible.

 

[Scooot]

Well looks like you beat me to it.


Any thoughts on this? It does seem odd for them to fight so hard to keep the option open to invest 3% into hedge funds...only to start shutting down their internal trading units.

 

[alain]

IMHO, big banks will stay away from this business for a while. I'm sure at some point, they will get back into it.

 

[marina]

Well looks like you beat me to it.


Any thoughts on this? It does seem odd for them to fight so hard to keep the option open to invest 3% into hedge funds...only to start shutting down their internal trading units.

The proprietary trading business turns in part on one’s ability to find the fool -- to find people willing to take the stupid side of the smart bets you are placing. One of the side effects of our seemingly endless financial crisis is to wash a lot of fools, many of them German, out of the game.
It’s as if a casino owner awakened one morning to find the tourists had all gone, and the only remaining patrons are pros counting cards at his blackjack tables. As he looked around his casino, for the first time in his life, he couldn’t find the fool. And the first rule of the casino business is: if you don’t know who the fool is, it’s probably you.