Many of the world’s biggest banks are proposing reforms that would limit the size and scope of their businesses in one of the most dramatic responses to the credit crisis.
The proposals would hold down the number of investors who can buy complex financial products, bring large swathes of the derivatives markets into regulators’ sights and call on banks to spend more on technology and risk management.
The consequence would be that many of the securitisation businesses that helped fuel the boom on Wall Street and the City of London in the middle years of this decade could face tougher oversight and find far fewer opportunities for growth.
“No one has any illusions [about the severity of the problems],” said Gerald Corrigan, managing director of Goldman Sachs and former head of the Federal Reserve Bank of New York, who led the study on which the proposals are based.
“Costly as these reforms will be, those costs will be minuscule compared to the hundreds of billions of dollars of writedowns experienced by financial institutions in recent months, to say nothing of the economic dislocations and distortions triggered by the crisis.”
Emphasis added by me.
On the surface, it sounds like they've gotten religion.
However, the Big Guys are never altruitic when it comes to the Little Guys they disdain.
I wonder how they'll be setting up the Little Guys for the Big Shaft.
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