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As Volcker Rule Nears, Banks Tread Fine Line on Proprietary Trading – NYTimes.com

When JPMorgan Chase revealed its $2 billion loss last week, it looked as though the big Wall Street banks were up to their old tricks, using their government-backed funds to make risky trades in a misguided effort to improve their profits.

But even banks that focus mainly on good, old-fashioned lending do their fair share of high-stakes trading.

While few other banks, if any, pursue the complex strategies that led to JPMorgan’s losses, many traditional lenders regularly buy and sell securities, and make bets with derivatives, as part of their core operations. Financial firms say such activities allow them to earn a basic return on the deposits they collect and to offset risks on their balance sheets.

via As Volcker Rule Nears, Banks Tread Fine Line on Proprietary Trading – NYTimes.com.

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