Goldman Sachs vs. Fin-Reg: Prop-Trading Spin Off? (GS)

Every major brokerage firm and bank is trying to factor in just how much the recently passed Financial Regulation is going to have on their operations ahead.  Goldman Sachs Group Inc. (NYSE: GS) may have the answer of getting around all of those woes (and all that profiteering) and still staying within the law… spinning the proprietary trading off.

Whether or not this would be a partial spin-off, a business separation, or even a full spin-off is yet to be known.  CNBC reported that a spin-off could come as early as this month.  Today’s report follows prior reports from Fox Business Network’s Charlie Gasparino (formerly with CNBC) that employees in the proprietary trading operations were being moved into the asset management division.

How this pans out exactly can have a common outcome from potentially many different paths.  Maybe Goldman Sachs could spin these off as a separate unit to shareholders and just hold a minority stake in the new company.  It seems unlikely, but possible.  There is also the path that proprietary trading becomes an asset management unit and the capital could be opened up to outside investment.

Whatever path that Goldman Sachs takes to get around the Volcker rule or to have a lower degree of regulation will be, you can bet that Goldman Sachs will be among the first to pioneer the move.

The public needs to remember one thing: Goldman Sachs is a bank holding company, but it has no bank.  How many retail branches have you driven past where Joe Public can just walk in and open an account?  If you answered ZERO, you are correct.  Goldman Sachs is open to the public for its financial services, brokerage services, and asset managements services.  You just need to have at least two commas in the dollar amount there.

JON C. OGG