Charlie Gasparino breaks down the “financial reform” bill at FoxNews:
Goldman executives say they have conducted an internal study of the various proposals in the financial-reform legislation, which while still incomplete, is likely to pass in some semblance of its current form and signed into law by President Obama by the end of the year.
The areas that are likely to be in any final package will include cutbacks in proprietary trading, or trading with the bank’s own money, a new consumer-watchdog agency and forcing firms to give up positions in hedge funds.
But, dig deeper inside the bill and there are plenty of new rules and regulations that will be squeezing commercial banks, and that will directly impact JPMorgan’s bottom line. These regulations include capping fees on debit cards and limits on how many bank branches can be owned in a particular geographic area.
Even the so-called Volcker Rule, named after presidential economic adviser Paul Volcker, with its limitations on prop trading and hedge fund ownership, will likely hit JPMorgan hard.
JPMorgan holds a massive hedge fund and private equity business, including the Highbridge Capital. Depending on how the Volcker Rule is interpreted, JPMorgan may have to spin off these holdings.
“They have many more pressure points than we have,” said one senior Goldman executive, who spoke on the condition of anonymity.
Of course, Goldman has every incentive to spin the current financial reform legislation, and to take shots at JPMorgan, which has emerged as the firm’s chief competitor on Wall Street in recent years. The reform legislation, with its limits on risky trading activities, was seen taking special aim at Goldman’s business model, which produces huge profits by trading esoteric securities. But officials at Goldman say while they will lose business, be forced to shed certain activities and their profits will shrink, they believe from a competitive standpoint that the bill is at most a wash.
Read the whole thing here.
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