It's here, and she's a tenative skeptic. I think that prop trading has often been highly profitable for banks, but she may be on to something if it is small potatoes. And certainly the Volcker Rule doesn't forbid the existence of trading desks. So traders may move from proprietary to elsewhere in the bank and still keep doing their thing.
Was prop trading such a minimal deal? The argument reminds me of Jonathan Knee's memoir about his time at a bulge bracket investment bank - he worked the media group, which was very profitable, and kept its costs down... but the managers said: your group should not worry about costs and simply must make more money. In business, small, unscalable earners often aren't worth the time. Knee left for a botique, so there you go.
However, even though it is just journalism, here's another story suggesting that the transformation of investment banks has been substantial and arduous for the bankers. There must be an answer to this empirical question, but my sense is that the insane profitability of prop trading desks really did contribute to bottom lines of banks - and they are contributing much less now.
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