Sense on Cents

Is President Obama’s proposal to rein in risk on Wall Street genuine or merely another Washington political ploy to curry favor with an enraged American electorate?

As with any proposal, the devil is always in the details. Initial pushback from Wall Street is strong but also informative. What is Wall Street highlighting? The large Wall Street banks are promoting the fact that proprietary trading operations do not encompass a large percentage of their overall business. In fact, JP Morgan already shut down an internal proprietary trading business in 2009.

I believe Wall Street will paint Obama’s proposal as an overreaching and aggressive intrusion into its business and free enterprise. What are we to make of all this? What exactly is Obama proposing? I’m not sure even he would know. The fact is, Obama’s proposal to curtail proprietary trading resides in defining exactly what proprietary trading encompasses. (more…)