Part 6/8:
The hosts also discussed the expectation that Bank of America would leverage the supposed synergies from its acquisition of Merrill Lynch. Although conventional wisdom suggests that larger operations yield greater economies of scale, the reality proved more complex. Regulatory constraints, especially those related to trading activities following the implementation of the Volcker Rule, curtailed Bank of America's ability to profit from its expanded trading operations. Since the merger, the bank's trading revenues have significantly dropped.
Maxfield explained that the ability to engage in proprietary trading—previously a lucrative activity for both Banks—was diminished under new regulations, directly affecting profitability.