Bankers and policymakers find 'common ground' on regulation
POLICYmakers and bankers agreed on the need for global financial regulations after a week of mutual recrimination at the annual World Economic Forum meeting in Davos, Switzerland which ended yesterday.
"On many aspects, we found common ground," Deutsche Bank boss Josef Ackermann said after a private session of bankers and regulators. "There was better dialogue between business leaders, political and regulatory leaders than ever before."
The meeting came after policymakers pushed back at bankers, who warned of excessive and unco-ordinated attempts to toughen regulation after unprecedented bailouts of the financial industry. Executives from Bank of America, HSBC, Standard Chartered and JPMorgan Chase were among those in attendance. Nobody from an Irish bank or regulator attended.
"There are very important issues to which there needs to be input from politicians, regulators, from the central bankers, private bankers and the private sector," said Adair Turner, chairman of the UK's Financial Services Authority. "The purpose was to discuss the full range of issues."
One of the topics was how to define whether an institution was "too big to fail", meaning that its collapse would harm the entire financial system, according to John Sununu, a former US senator who attended. "Some people think you need to try, and others think you need to understand that small institutions with certain interconnectedness can cause systemic problems just as much as large institutions," Mr Sununu said. "Larger institutions can sometimes use their size to diversify their risk."
"We had good discussions and agreement among all the participants," said Brian Moynihan of Bank of America, the largest US bank. "There has to be a lot of discussion to make sure that we do the things we need to do in terms of reform."
White House economic adviser Larry Summers, British Chancellor of the Exchequer Alistair Darling and French Finance Minister Christine Lagarde also attended. Central bankers at the gathering included Zhu Min, the deputy governor of the People's Bank of China; Italy's Mario Draghi; France's Christian Noyer; Mexico's Agustin Carstens; and Switzerland's Philipp Hildebrand.
"It was the first time I've seen both sides go beyond the rhetoric," said Duncan Niederauer, head of stock exchange owner NYSE Euronex. "There were practical suggestions being discussed. It's now everyone's responsibility to produce some tangible results."