Wall Street traders set up a risky situation
XLF•Banks and trading firms are earning more from financing
Ever since the 2008 financial crisis, the riskiest, proprietary trading activity has moved outside of the major lenders. Yet revenue booked by traders at the five biggest Wall Street banks soared 71% over the past three years. Only some firms break down how much of that revenue came from forms of lending. But at Bank of America, Citigroup and Goldman Sachs, about 40%, on average, of it is expected to come from financing fees in 2026, according to Visible Alpha, up from 27% three years ago.
Situational Awareness was a particularly avid customer. Aschenbrenner leveraged the fund’s stock trades, which made up about two-thirds of his portfolio, by three to four times, the Wall Street Journal reported. After wild stock volatility triggered margin calls, the forced sale of his public portfolio to Citadel spared the banks from losses. The fund’s holdings consequently dwindled in value by about $35 billion, CNBC reported.
