Obama plan to rein banks draws fire at economic think-in
Published 28/01/2010 | 05:00
BILLIONAIRE investor George Soros said the largest financial institutions may be "too big to fail", even under US President Barack Obama's plans to rein them in.
"Some of the banks will spin off investment banks that will still be too big to fail," Mr Soros said at the World Economic Forum in Davos, Switzerland.
Mr Obama's plans to limit the size of banks and prohibit them from investing in hedge funds and private-equity funds has drawn strong criticism from bankers attending the forum, and was met with a cool reception from many governments.
Bob Diamond, president of Barclays, urged governments to co-ordinate regulation and resist the temptation to act in isolation before elections in the Britain and the US.
"It's very important to step back and be very thoughtful about the role of trading and the role of risk in banks, because without risk we don't have a banking industry," Mr Diamond said. Banks which are willing to take cross-border risks are essential "to have jobs and economic growth".
Deutsche Bank chief executive Josef Ackermann also said the Obama initiative risked hindering global economic growth.
"If you have fragmented, small players in the financial sector, meeting the requirements of global trade and production, you will have a dichotomy which is not going to work and would not be for the benefit of the real economy at the end," Mr Ackermann said.