Normally you'd think this could only happen on a frigid day in Hell, but according to CNBC, Goldman Sachs and Morgan Stanley may shed the "bank holding company" classification in order to skirt the Volcker rule banning propriety trading with the firm’s own capital, according to Susquehanna Financial Group analyst David Hilder.
Goldman and Morgan Stanley both became bank-holding companies during the 2008 financial crisis in order to be eligible for emergency Fed lending. But the new rule, which would limit trading when the bank's own money is a risk, would deal a major blow to one of Wall Street's most profitable businesses.
“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 in a note to clients. “There will be large additional costs imposed on banks as market-makers that will not apply to market-makers not owned by banks. We would expect that to draw capital to non-bank market-makers, and cause Goldman Sachs and Morgan Stanley to examine whether it makes sense for them to exit the banking system….”
Find out the rest at http://www.cnbc.com/id/44875711
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