Some would say you could have blown me over with a feather when I saw Sandy on Squawk Box suggesting investment banks be separated from commercial ones. But I am not surprised. Consolidating in the 90's made sense when the bigger the bank the cheaper it's funding. Now that funding is cheap everywhere and opportunities few TBTF is a hinderance. Bank trading desks have cheated their corporate and government clientel for so long that most CFO's hang up or don't let the call through when a Wall Street "Boiler Room" tries to call. The only clients left for these trading desks are other banks and hedge funds. As I keep repeating, these desks are just playing with themselves and create no economic good.
Investment bank's that advise clients should go back to being the "White Shoe" partnerships of old. The trading desks should be peeled off onto Hedge Funds where they will diminish. Commercial banking should be boring again. The Investment Bank may advise a P& G, for example, to hedge with a certain product from another firm; but a Banker's Trust milking customers with their prop trading desk is so over.
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