January 29th, 2010
02:52 PM GMT
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Davos, Switzerland (CNN) – A great deal can unfold in the span of 24 hours in Davos. That certainly was the case on the issue of banking regulation. The annual meeting of the forum opened with a panel of financiers pulling out their crystal balls for 2010/11. One in particular stood out, Bob Diamond, CEO of Barclays, who takes issue on the effort by the Obama administration to separate out or govern proprietary trading by banks who collect deposits. He says it will stifle innovation and the economic recovery.

French President Nicholas Sarkozy was on the other end of the financial spectrum and sounded like he wants to ban market making forces altogether. Again President Obama made it a central issue of his State of the Union address, right along job creation. The news cycle was rounded out when Diamond came on CNN today sounding almost like a statesman when he noted, “creating an environment conducive to economic growth and job creation is critical.”

See CNN's full Davos coverage

One needs to read between the lines here. These power players are marking their turf. Diamond did not borrow money from G-7 governments to get bailed out during the crisis – he took investments from Middle East sovereign funds in Qatar and Abu Dhabi instead. As a result, he feels freer to speak his mind about what banking might be faced with after the high profile bonuses being paid out in the shadow of the worst downturn in 60 years.

As one high profile banker said to me before we took the stage on a plenary session, don’t forget these ideas have to become law. The banking sector is already marshalling forces against such a move – as the multi-trillion dollar showdown gets underway.

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soundoff (6 Responses)
  1. Khoo Boo Boon

    Bob Diamond, CEO of Barclays, "who takes issue on the effort by the Obama administration to separate out or govern proprietary trading by banks who collect deposits" should be told that it is unfair that bank's depositors should suffer from the losses of the bank's proprietary trading resulting from reckless or risky trades. There is why there is the need to separate and govern proprietary trading of the banks.

    If no separation and no appropriate regulations are put in place, these banks might be be leveraging 40x the capital of their proprietary arm. Preventive measures must be put in place to prevent reckless trades and over-exposure rather punitive measures. What benefits are there to close the barn-gate "after the horses have bolted"?

    January 30, 2010 at 9:25 am |
  2. rbe1

    Did you listen to any part of Sarkozy's speech ? It doesn't appear that you did, based on your comment. Or is this an example of fair and balanced ? Sarkozy was only commenting against crooks, of which the banking community apparently had and has, many.

    January 30, 2010 at 1:40 pm |
  3. carl allen

    Diamond ... creating an environment conducive to economic growth and job creation is critical

    Allen ... leaving blind men stroking the warm furry skin of a well fed tiger is madness

    January 30, 2010 at 11:45 pm |
  4. carl allen

    While some in the banking community are crooks, perhaps far more in the banking community have deliberately adopted a policy of silence is golden i.e. hear no evil and see no evil.

    February 1, 2010 at 11:39 am |
  5. frank

    whatever any banker may sound off the essentail issue in the US is the creation of jobs!
    this can be acheived if there is credit flowing to the small and medium size industrial sector, which has borne the maximum impact of the financial down turn.
    while the "too big to close bank" have been bailed out by the Fed the small and medium size industrial sector which is the major creator of jobs has been completely neglected.
    the only way for the US and the world economy to start generating goods services and jobs is for them to get BAILED out by the BANKS

    February 5, 2010 at 2:12 pm |
  6. Andreas Stockholm

    There has been and still is too much focus on banks in my opinion. Banks will operate within the legal framework set up and they are neither crooks nor saints. What I want to know is why there is so little attention being paid to the regulators, rating agencies and insurance industries who acted as unified junk-asset-pushers until the whole thing collapsed. Clinton and Greenspan probably had no idea what kind of monster they actually set in motion. I fear that by focusing on banks and their bonus schemes we will miss the larger picture which needs serious overhaul – the derivatives sector.

    February 7, 2010 at 9:38 am |

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