The answer, it seems, is to use all that wonderful research for the
banks to place their own bets. Proprietary trading, which goes in and
out of favour depending on whether it is racking up profits or losses,
is back in vogue in a big way.
Proprietary trading has another appeal for banks. For a while now their
best traders have been walking off to join hedge funds, where they make
a ton of money for themselves. By keeping them in-house, some of those
profits should come through to the bottom line … as well as the
occasional spectacular loss, of course. But the bad publicity and
interference cannot be worse than what has been heaped upon them by
Spitzer.
Brian Caplen
