“It’s hard to know how much of [bank profits from prop trading] will be affected by the various new rules. But suppose trading revenue at Morgan Stanley could fall by 30 percent from existing levels. All else being equal, a third of the company’s business would still come from trading, more than from any other single business line.”

Here’s the problem with this paragraph from a post this morning on Reuters Breakingview that is otherwise pretty good: It’s plainly impossible at this point to come close to predicting, with any expectation of accuracy, the losses prop desks at investment banks could see.

Financial reform was just signed into law earlier this month. That’s the legislative part of it all. The regulation – the specific ways that legislation will be deployed onto the markets – has hardly been explored in any meaningful way, let alone made. It’s still all a very new thing to virtually everyone connected to the markets.

Plenty of news outlets make the ridiculous assumption that because legislation has been passed, the regulation associated with it is already reliably predictable – and it’s all well and good to fling around these kinds of estimates like a frisbee when it fits into a post. I just wish the Reuters writer would have quoted a source on the 30 percent estimate. That would’ve made the number seem like less of a guess and put a name behind the prediction just in case something ridiculous happens, like prop-trading profits remaining steady despite the new regulations.