Goldman Sachs: Lincoln's Derivatives Proposal Likely Won't Pass

[laughingliberal]

Buried in a research report released yesterday on the growth potential of equities in the U.S. financial services industry, Goldman Sachs offered a glimpse into what the final version of the Wall Street reform bill might look like. (Hat tip to Morning Money.)

In particular, the report predicts that the Senate bill's most controversial element won't make it through the conference committee negotiation process. Sen. Blanche Lincoln (D-Ark.) proposed a measure that would require the nation's largest banks to spin off their derivatives desks, a move that initially passed with GOP support.

Though the spin-off requirement could cost banks billions annually, Goldman isn't at all convinced it will pass. From the Goldman Sachs report:

"...while regulatory risk is (hopefully) reaching a peak it does create the specter of an overhang for some time. In particular our Washington analyst does not expect the Lincoln proposal to make it into the final version of the bill, but should this occur it would be very negative for investment banks and potentially exchanges as volumes would suffer. <snip>

http://www.huffingtonpost.com/2010/05/25/goldman-sachs-lincolns-de_n_588394.html

Well, it's toast. The Goldman government isn't going to go against their bosses, are they?

The article goes on to quote McMahon (D-NY), member of the New Democrat Coalition in the House as saying it should 'come out now.'

[Ruby the Liberal]

1. Goldman: "We already bought it. I dare you to short us."

[laughingliberal]

2. +1 nt