Anything written by Gillian Tetts is well worth reading. Her book, "Fool's
Gold" is by far the best of all of those describing the credit crunch fiasco.
She was also on BBC's "Politics Today", together with three of the MPs who
have not been involved in the recent corruption exposures (three, that is,
of no more than about a dozen out of more than 600 MPs who have not been
tainted with excessive expenses claims for many years past). But when they
left the studio and the discussion turned to economics, she was saying that
government action so far in quantitative easing (US, UK, EU) had only
papered over the cracks. The real problems are only just starting. This is
what several people at Davos were telling her in confidence.
Keith
At 08:53 04/02/2010 +0800, you wrote:
Interesting in itself and very revealing about the real venue of (and
participants in) global conference.
M
-----Original Message-----
From: [email protected] [mailto:[email protected]] On Behalf Of
Sid Shniad
Sent: Thursday, February 04, 2010 6:56 AM
Subject: Bankers try to fight off wave of controls
<http://www.ft.com/cms/s/0/be5b72a4-0e85-11df-bd79-00144feabdc0.html?ftcamp=Late_headline1/NL/USFeb2010/Vanilla_dvos10/0/>http://www.ft.com/cms/s/0/be5b72a4-0e85-11df-bd79-00144feabdc0.html?ftcamp=Late_headline1/NL/USFeb2010/Vanilla_dvos10/0/
The Financial
Times
January 31 2010
Bankers try to fight off wave of controls
By Patrick Jenkins and Gillian Tett
Protesters were handing out leaflets in the streets of Davos at the
weekend. But their anger was not directed against world poverty, nuclear
power or war; instead they were demanding that banks should put their
derivatives business on to exchanges to make the financial system more
transparent.
It is a potent reminder of how issues about financial stability dominated
the agenda at the World Economic Forum last week. For most of the past
decade, banks have used the WEF in Davos as a lavish opportunity to
entertain clients. Last week they were fighting to fend off a wave of
controls on sectors ranging from bonuses to proprietary trading and
derivatives.
International supervisors, led by the Financial Stability Board and the
Basel Committee on Banking Supervision, are pondering how and when they
should change the levels of capital and liquidity that banks will have to
hold in future. Moreover, in recent weeks, politicians Barack Obama, the
US president, Alistair Darling, the UK chancellor, and Nicolas Sarkozy,
the French president have weighed in with measures, short-circuiting the
more consultative regulatory response.
Whether the banks could claim victory for their lobbying at Davos remains
unclear, partly because the financial industry is fighting on many fronts.
One issue that dominated discussion at the WEF wasproprietary trading and
a putative move by the Obama administration to ban the activity at banks
that take insured deposits.
Most bankers vociferously opposed the idea. Frédéric Oudéa, chairman and
chief executive of Société Générale, said: There is a process already
under way in Basel. We need it to remain an orderly process in which
regulators take the lead role and organise the dialogue with the banking
industry. Otherwise there will be confusion, uncertainty and additional
pressure on the financial system.
There is widespread confusion about what any ban might mean. Barney Frank,
chairman of the House of Representatives finance services committee in
Washington, told the Financial Times last week that banning banks from
proprietary trading could be covered by a bill his committee had prepared
that would permit a systemic regulator to clamp down on it. Some Western
regulators said a ban might be incorporated into moves being considered by
the Financial Stability Board to tighten the treatment of bankstrading books.
But policymakers in Davos warnedthat banks would be foolish to think they
would be let off the hook, as one said. There is real political pressure
to do something,one senior western regulator said. The banks need to
recognise that.
That, in turn, meant a subtle but important shift in attitude among the
bankers developed last week. Until a few weeks ago, most bankers had
expected to use the Davos meeting to swap views on the shortcomings of the
Basel committee proposals, put forward by financial bureaucrats in a
consultation document late last year.
In the event, there was plenty of handwringing over how the new Basel
rules on capital would make it unfairly expensive to control a stake in a
subsidiary, rather than wholly own it; and how plans to limit the value of
deferred tax assets could strangle economic recovery. But the most
powerful consensus was that however awkward regulators were, unpredictable
politicians were worse.
Bob Diamond of Barclays Capital talked about the very negativeimpact US
measures to constrain banks would have; Josef Ackermann of Deutsche Bank
spoke of the costs of cacophonyassociated with unco-ordinated proposals;
Sadeq Sayeed, chief executive of Nomura in Europe, the Middle East and
Africa, said: A lot of the policy and tax proposals that are coming out
are half-baked.
While the international bureaucrats were keen to distance themselves from
the bankers, they stressed that reform had to be co-ordinated rather than
driven by domestic politics.
We cannot have reform of the system driven by what each country sees that
it needs for itself,Dominique Strauss-Kahn, head of the International
Monetary Fund, told the Davos forum on Saturday. We need to have
co-ordination we cannot afford to have different solutions in different
parts of the world.
!DSPAM:2676,4b69ff2c177553797547867!
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Keith Hudson, Saltford, England
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