"This Happens When Most Of Your Senior Advisor Network Are Radical Capitalistic Hating Communist."
After a year in which his administration’s policies helped produce some of the best years on record for Wall Street firms, President Barack Obama has been struggling to recast himself as an adversary of the banks.He seems to have succeeded in taking on this role with one important group—the bankers themselves.
“Pretty much everyone hates Obama,” a senior trader at a major Wall Street firm told us."He's never been popular but this is a whole new level," he said.The trader explained that the thought the Obama administration’s plans were worse than unworkable.“It’s one thing if he proposes something we don’t like, that we disagree with. But when he puts forth this thing, none of it backed with any thoughtfulness about how things work…it really pisses people off,” he said.
The trader was referring to the so-called Volcker Rule, which would ban banks from engaging in proprietary trading or owning hedge funds. He explained that the way banks carry out proprietary trading makes the ban unworkable.“Every single trading desk that is engaged in market making also does proprietary trading, taking a position on the market. You cannot unscramble the egg,” he said.
He also said that the ban on hedge fund investing by banks was impractical.“No institutional investor will ever go into an alternative investment product if the bank doesn’t also have skin the in game,” he said. “The whole concept doesn’t work.”
He critiqued the rule as misdirected, arguing that the problem at banks wasn’t prop trading and the crisis didn’t originate solely in commercial banks. What’s more, he explained that he thinks it is unwise to allow Goldman or Morgan Stanley to remain outside the rules if they choose to reject the bank label and cut themselves off from access to the discount window.