I was curious why the largest and most profitable proprietary trading banks such as Goldman Sachs, Citi and J.P. Morgan were not putting up more of a fight against the passing of the so-called Volcker Rule, which, if it were to pass in its pure form, would have prevented banks from being able to invest their own capital into various derivatives, hedge funds and private equity funds. Now I know why there was little fight: under the financial overhaul bill, as agreed upon last Friday, banks might not have to comply with the watered-down version of the rule for another 12 years.
That is, Goldman, J.P. Morgan, Citi, Morgan Stanley and scores of others will be given more than a decade in which to liquidate their stakes in certain investments. Which seems like a heck of a longtime to give banks, considering what transpired in the past few years. In 12 years time, there will have been three more World Cups played (in addition to the one being contested now), kids currently in the eighth grade will have been hired as salesmen and traders for nearly every bank on the Street, and chances are that dudes with names like Blankfein and Dimon and Pandit will have long since left the corner suite, no doubt taking with them seven- and eight-figure exit packages.
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