"Hotshot" Traders Leaving Street

According to the WSJ, "hotshot" traders are leaving Wall Street in droves. Apparently, the mere threat of some watered down financial regulation that will limit pay is causing all the talent to flee in droves. The article notes the high profile exit of Deutsche Bank's Greg Lippmann on Friday and, well, that's pretty much it. So, one guy leaving. That's almost a drove. The rest of the story focuses on hedge funds, Blackrock and Citadel, that are gearing up to seed traders and portfolio managers who wish to leave Wall Street firms to trade their own capital. Well, to trade other people's capital, just with more upside than they'd get at their current banks. Sometimes it's not enough to be a multi-millionaire. Much better to be a billionaire.

All cynicism aside, if this mass exodus of traders leaving the street is actually occurring and isn't just more of the Journal editorializing its hatred of new Wall Street regulations as a substitute for actual reporting, then I'd say it's good news. I still firmly believe that risk taking should occur with private capital and not with FDIC guaranteed funds. Besides, hotshot traders come and go. New guys come along to replace the old guard. Proprietary trading is hard and many traders that thrived in the cushy environment of a bank, where it was easy to pick off customers and borrow money at zero, may not do as well with limited capital, higher financing costs and no customers to lean on. And the really good ones should be starting their own firms and creating more jobs for our beleaguered job market. Let the exodus continue, I say. Let's see if we can get another "article" from the WSJ tomorrow about how traders are threatening not to go to hedge funds because of the threat of higher taxes on carried interest.