Easy money is gone for the likes of GS, JPM, MS, and Citi as far as proprietary trading is concerned.

But as banks, particularly Citi, it is a better environment where they can channel more efforts in their banking functions which they do have the expertise than keep trying to become quasi-hedge funds and keep of dreaming of massive profits from trading where they are not particularly knowledgeable or well experienced.

Laws against using customers’ deposits to trade or invest into risky assets must be implemented.

Depositors saved their money into banks for safety. Many depositors will not touch risky trading or investing in the equity, bond, commodity, or currency markets.

If their money got used by banks in exactly the same place where the depositors do not want to thread; that defeats the purpose of saving and depositing money for their future needs in a much safer way which is by depositing into interest bearing savings accounts guaranteed by the FDIC.

For brokers and trading firms. They just have to keep improving their trading/hedging skills. They are allowed to leverage but trading/investing should not be leveraged as much as the banks which are allowed to 11:1 leverage.

Banks can leverage so much because they deal on more secure hard assets such as house and lots or profitable business establishments by providing loans. Land cannot evaporate in an instant and profitable enterprices are not allowed to leverage too much thereby preventing them from losing massive amount of money in an instant.

Trading/hedging is a much more risky business. Money can evaporate in an instant when excessive leverage is used if and when the trade goes against you.

- aarc

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