Martin Wolf: When Banks Attack
Good Martin Wolf column im the FT on the largely spurious protests being made by banks in the face of calls for serious reform:
In an interview
with the FT, Marcus Agius, chairman of Barclays, indicates perfectly
what the backers of regulation are up against. His attack starts by
insisting upon a "level playing field" across jurisdictions. He also
argues against excessive capital requirements, since "the next time the
banking system wants capital, it won't be supplied [if] the potential
new investors [don't] see the [attraction]". Moreover, "one of the
other consequences will be that credit will become more expensive and
[that] is not conducive to a return to economic growth around the
world." He also insists that "banks should not be vilified for taking
risks".
...We must not get diverted by the financial sector's opposition or by
populist rage. We must focus, instead, on the core issue. Trying to
make financial systems safer has made them more perilous. Today, as a
result, neither market discipline nor regulation is effective. There is
a danger, therefore, that this rescue will lead to still greater
risk-taking and an even worse crisis at some point in the not too
distant future.
Either we impose a credible threat of bankruptcy,
or institutions we have to support are made safer, or, better, we have
both of these.
More
here.
