We have a President who, in his displays of pique against banksters, can work himself up to calling them “fat cats”. But immediately after that, um, display, he met with bank CEOs (well, the ones that didn’t stand him up) and was conciliatory, when the right move would be to show some steel. And when, after chewing out lobbyists in the State of the Union, which department in the Executive branch was the first out of the box to call lobbyists to set up private briefings? The Treasury.
It sure isn’t hard to discern the yawning chasm between word and deed and decide which to take seriously.
By contrast, the authorities in the UK are more united in their stance and are taking steps that show far more determination as far as reining in the financial services industry is concerned. Even if the bonus tax did not work as planned, it was a bold move, and at least showed seriousness of intent. And the UK regulators are pushing measures sure to elicit howls of pain from the banksters. The latest is that the head of the FSA, Lord Turner, has suggested a crackdown on currency carry trades. And more important, look at the basis of his argument: carry trades serve no useful social purpose. Lordie, if banks are restricted to doing things that are productive, just think of what it will do to profits and bonuses!
Similarly, can you imagine anyone of any stature in the US (well, save maybe Paul Volcker, who is currently in favor, but who knows how long that will last) having the kind of talk with bank top brass that Alistair Downing had. From the Guardian:
Alistair Darling told the City’s top bankers today to stop feeling sorry for themselves and instead work with the government to create a stronger financial system.
The chancellor held clear-the-air talks with eight UK and foreign-owned banks at the meeting of the World Economic Forum in Davos at which he urged faster international action to strengthen banking regulation.
“My message to the banks is that it is in their interests to get off the front pages,” Darling said at a press briefing ahead of the meeting.
“The banks should do what they are supposed to do, provide credit to the economy. They must know that changes are necessary. They can all see that the regulatory regime needs to be more robust and more intrusive.
“Don’t feel sorry for yourselves. Work with the government to see how you can improve the situation.”
Today’s meeting involved executives from Standard Chartered, HSBC, Barclays, Goldman Sachs, UBS, Morgan Stanley, JP Morgan and Citigroup.
The chancellor said he was frustrated that changes to bank regulations proposed by the G20 group of developed and developing nations were taking so long to be agreed by the Basle committee of central bank governors and international regulators.
“The Basle process can be quite tortuous,” Darling said. “We don’t have years to sort it out.”
He added that he was disturbed by reports that proposed reforms to the global financial system – originally expected this autumn – now looked as if they would be delayed until 2011.
“I would like to see the Basle regulations published this autumn,” Darling said. “I have heard it may slip into next year. That would be very, very bad.”