Bank of America (NYSE: BAC) Announces Prop Trading Layoffs
As the Dodd-Frank financial regulatory reform legislation comes into greater focus, the first issue many of the major banks seem to be dealing with revolves around their prop trading departments.
Rumors abound that bands of prop traders at Goldman Sachs (NYSE: GS) are negotiating with boutiques and other firms to move their business there, and today, Bank of America (NYSE: BAC) made a major announcement regarding their proprietary trading desk. A spokesperson for the company confirmed to CNBC yesterday that Bank of America Merrill Lynch will lay off 20-30 people from their prop trading desk.
The spokesperson sought to clearly note that these layoffs are not related to their individual performance, but rather, a step toward the bank’s effort to comply with the new financial regulations. The spokesperson commented “We continue to explore the best possible ways to comply with the Volcker rule, and this is one step in that direction.” Was unemployment created and lost wages part of the plan Congress cheered mightily upon passing?
Reports have surfaced noting that JPMorgan Chase (NYSE: JPM) is planning similar actions, and prop trading around the major banks is clearly being winded down. The “Volcker rule”, as this has come to be referred to, was just one component of the sweeping financial reform bill passed earlier this year by Congress. The rule seeks to limit the amount of speculative trading a firm can pursue for its own benefit and not on behalf of clients.