NEW YORK (TheStreet) -- More than two years after the passage of Dodd-Frank and more than four after the collapse of Lehman Brothers, fundamental questions remain about what the largest U.S. financial institutions will look like in the post crisis era.
The latest evidence of the uncertainty comes from Morgan Stanley (MS), which has been shopping its once-revered commodities trading business for several months, according to several news reports and a former manager in the unit. While CNBC reported in July that a 15% stake sale was being discussed with the Qatar Investment Authority, reports last week in the Financial Times and Reuters indicated a larger stake sale--or maybe even a sale of the entire unit-- was being discussed, though Reuters added that the talks had run into difficulties.
A key issue, according to the Reuters report, is whether the Federal Reserve will allow banks to keep physical commodities and acquire new ones to complement their trading businesses. Goldman Sachs (GS) and JPMorgan Chase (JPM) also possess large holdings of physical as well as financial commodities assets.
A report from Bernstein Research analyst Brad Hintz on Friday argued that if Morgan Stanley were to exit the business, it could create an opportunity for Goldman."Goldman Sachs has said on numerous occasions that its trading operations should benefit as others pull back from portions of the market, pricing adjusts and market shares shift - this may be the first such retreat," Hintz wrote. But commodities trading isn't the only instance where new rules are forcing some players out of businesses they had dominated while leaving others behind to gain still larger share. A similar phenomenon is occurring with mortgage servicing, where Bank of America (BAC) Citigroup (C) and JPMorgan are retreating from the business due to stricter capital rules that make it less profitable, while Wells Fargo (WFC) has decided it will capitalize on the opportunity to gain share despite the higher costs of staying in the business. Pay is another area where clearly much has still to be determined. Though companies and analysts have been saying for some time that compensation has to move lower, Morgan Stanley remains under pressure from shareholders to do more, according to Reuters, and CEO James Gorman told the Financial Times Friday he plans to be more aggressive in slashing compensation. But this isn't the first time Gorman has made these types of comments , and investors apparently still aren't satisfied. Has Wall Street really changed in the wake of the crisis? One senses the biggest changes are still to come. -- Written by Dan Freed in New York. Follow @dan_freed
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV