By Mark Gimein
Bloomberg’s Max Abelson today reports on Goldman Sachs’s Multi-Strategy Investing unit — in effect a hedge fund within the bank that bypasses the Volcker rule’s limits on proprietary trading. It’s a great story. It also raises a question: Is prop trading really the problem with Wall Street?
Before you answer, remember what caused the collapse of Bear Stearns Cos. and Lehman Brothers Holdings during the financial crisis, as well as the massive losses at Merrill Lynch and other banks. Obviously all of them took stupid risks with their own capital. It’s just that the risks didn’t come from the sort of trading the Volcker rule addresses.
max abelson, bear stearns cos., merrill lynch, goldman sachs, lehman brothers holdings, bank, investment, financial economics, finance, primary dealers, financial crises, subprime mortgage crisis, financial services, group of thirty, paul volcker, proprietary trading, volcker rule, the bear stearns companies llc, lehman brothers holdings inc.
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