Goldman May Drop Bank Status to Sidestep Volcker Rule Costs, Hilder Says

[dkf]

Goldman Sachs Group Inc. (GS) and Morgan Stanley may consider dropping their status as bank holding companies to avoid expenses tied to the Volcker rule, said David Hilder, an analyst at Susquehanna Financial Group LLP.

The Volcker rule in its current form would impose costs on lenders and drive capital to non-bank market makers, causing the two New York-based firms to consider whether to stop being banks, Hilder said in a note yesterday, when four regulatory agencies issued a 298-page draft of the rule for public comment.

Goldman Sachs and Morgan Stanley were the biggest U.S. securities firms before they converted to bank holding companies after the September 2008 bankruptcy of Lehman Brothers Holdings Inc. Both became subject to regulation by the Federal Reserve and won access to central bank programs such as the discount window, which are designed to protect deposit-taking banks.

“The regulators have proposed a massive new compliance burden on banks to prove that their market-making activities are just that, and not proprietary trading in disguise,” wrote Hilder, who’s based in New York. “If these regulations are adopted in anything close to their proposed form, there will be large additional costs imposed on banks as market-makers that will not apply to market-makers not owned by banks.”

http://www.bloomberg.com/news/2011-10-12/goldman-may-drop-bank-status-to-sidestep-volcker-rule-costs-hilder-says.html

[rpannier]

1. The regulators have proposed a massive new compliance burden

Poor babies

[SixthSense]

2. how convenient

when becoming a bank holding company by purchasing a $10 million bank made them eligible for $13 billion in bailout cash

now that it is clear that the country is fed up with banker bailouts, this fiction is no longer a desirable thing

IMO their whole company ought to be put to the torch, to rid us all of an unmitigated evil.

[cutlassmama]

3. +1

[Sherman A1]

4. Seems

reasonable to me.

[alcibiades_mystery]

5. Their bank holding company status already made them more than the GDP of most countries

Of course they can dump it now.

These people are straight up thieves. They looted the Treasury, pure and simple, and they even admit it. They walk around laughing, "Well, if you're dumb enough to let us take your money, har har har."

[mod mom]

6. Watch our bought out elected leaders turn a blind eye if this happens.