Because otherwise JP MorganChase couldn't sink more of its too big to fail self into emerging markets hedge funds. But then they go and do it, for $6 billion. What am I missing? Holding it through a subsidiary reduces the risk? When Highbridge needs liquidity, who are they going to turn to?
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2 responses to “Good Thing We Have the Volcker Rule Thingo”
What you are missing is the death of the regulatory structure. What SOX did for SIVs Dodd-Frank will accomplish for capitalization ie the taxpayer will always be there.
Interesting Bloomberg piece on this topic:
http://www.bloomberg.com/news/2010-10-27/wall-street-proprietary-trading-under-cover-commentary-by-michael-lewis.html