On CNBC today, Richard Shelby, Republican and ranking member of the Senate Banking committee, agreed with the presenter and basically stated that proprietary trading by big banks had nothing to do with the crisis.
Really? Richard Shelby is just plain flat wrong when he states prop trading didn’t have anything to do with the crisis.
From a Bloomberg article on Merrill Lynch:
“Fixed-income TRADING revenue was negative $15.2 billion”
NEGATIVE 15 billion? Ouch! That little gem nearly took down the brand-spanking new acquisition of depositor-backed Bank of America.
And from this Dealbook article, it says that “Much of a $5.9 billion third-quarter write-down that Citigroup announced last week came in fixed-income TRADING.”
And that’s just from a quick cursory search!
Is Shelby ignorant of the facts, or is he spinning for someone.
Just a note. I don’t disagree with everything he says. But to say that prop trading wasn’t a factor, even a contributing factor, is just plain wrong.