Yes, it's a common refrain on CNBC: There's too much regulation and Dodd Frank is killing the banks. But if MF Global's demise shows anything, it's that rules are sometimes necessary. Since MF was a broker dealer, and not a bank holding company, it was able to skirt recent regulations designed to rein-in risk.
"Management was running MF as if it were 2007," said Dick Bove (Neutral). "And obviously the result was not great. MF's collapse validates Dodd Frank."
In the depths of the financial crisis, Morgan Stanley [MS 16.75 0.52 (+3.2%) ] and Goldman Sachs [GS 106.48 2.94 (+2.84%) ] changed their charters to become so-called bank holding companies, which gave them access to the cheap funding in exchange for more regulatory oversight. The Volker rule took that oversight a step further, aiming to prevent investment banks from making the type of proprietary trades that ultimately took down Lehman, Bear and now MF….
There’s more at http://www.cnbc.com/id/45119446
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