Friday 23 March 2018

Obama plan to reduce banks' risk-taking backed by UK Conservatives

Robert Hutton

A spokesman for the British Conservative Party yesterday backed US president Barack Obama's plans for tighter rules for US banks and said he wanted to see international agreement to separate retail banking from proprietary trading.

George Osborne's comments came as lawyers criticised Mr Obama's unilateral moves and said there had to be international rules.

"The president of the United States proposing this creates an awful lot of space for the rest of the world to establish a sensible system of international rules and agreements," Mr Osborne told BBC radio. "Let's have Obama-style regulation of the structure of banks."

Mr Osborne, who will become UK finance minister if the Conservatives, currently ahead in the polls, win the general election due by June, said this year's Group of 20 meeting of finance ministers in South Korea should draw up plans to introduce such rules worldwide.

In Paris, French Finance Minister Christine Lagarde said Obama's plan fitted France's push for tougher regulation. "I think it's a very, very good advance," she added.

Lawyers said the Obama plan to curb proprietary trading by banks with their own money shows banking regulations are being implemented unilaterally, not on the global scale lenders urged.


Mr Obama asked Congress to limit the size of banks and prohibit them from investing in hedge funds and private equity funds to reduce risk-taking.

"There seems to be an element of governments trying to outbid each other in regulation proposals," said Michael Wainwright, a London-based partner in financial services at law firm Eversheds LLP. "They are all trying to catch the mood of the moment with the electorate."

But Simon Gleeson, a regulatory lawyer at Clifford Chance LLP in London, said: "Banks can take just as much risk in commercial lending as they can in proprietary trading as Northern Rock and HBOS show" -- referring to two lenders bailed out by the UK government. (Bloomberg)

Irish Independent

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