Thursday, August 26, 2010

So go ahead and be risky and frisky, already -- that's not the issue

The NYT has a piece, Despite Reform, Banks Have Room for Risky Deals.

The tone is "how dare they?!":
When Congress passed a new financial regulation bill last month, it sought to prevent federally insured banks from making speculative bets using their own money. But that will not stop banks from making bets that some critics deem risky, even as the rules go into effect over the next few years.

That is because many such bets — on the direction of the stock market or the price of coal, for example — are done on behalf of clients. So, the banks say, they will continue to be allowable despite the new restrictions.

Indeed, several trades that were made on behalf of clients went bad for the banks even as the new rules were being debated in Washington this year. JPMorgan Chase and Goldman Sachs, for example, each lost more than $100 million on transactions handled for customers in the period from April to July.

Blowups like these, only larger, contributed to the financial crisis and forced the federal government to spend billions of dollars to bail out financial institutions.
Guambat says, set 'em free! Shoot the moon! Go for it.

Just don't come crying for a bailout if you blow it, and don't commingle your money with mine, or hide your bets in buckets of alphabet soup or GAAP gaps, or all dolled up with bogus ratings, or in off shore secret accounts so they can be doled out to the financial lemmings who herd and run together with our savings.

Guambat fervently wants to hope that financial reform does not eliminate the need for speed and all that testosterone risk taking.

He just wants the ambulance to pick up the pieces, should they underestimate the speed and crash, and take it all off to the cemetery and not to Dr. Frankenstein.

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