Bankers attack Obama's plans to limit size
Updated on 27 January 2010
In a direct attack on President Obama's move to limit the size and scope of America's banks, the head of Barclays declares "narrow banking" is not the answer.
The corporate jets are backed up at Zurich airport. The financiers' chariot-of-choice transporting even the odd chief of the world's bailed-out banks.
Indeed the bankers are back generally at the Davos world economic forum. Having stayed away last year as the financial system reeled, they face an unexpected existential threat from President Obama's vague crackdown, so they need the face time with the world’s finance ministers.
Today they started the fightback.
The president of Barclays's chief representative on Wall Street, Bob Diamond, hit back at the plans.
"I have seen no evidence or academic study that suggests shrinking banks is the answer," he said.
Britain's Barclays was hit the most on the markets after the US president said he would pass laws to limit the size and trading of too big too fail banks.
Barclays's president Bob Diamond said: "I'm afraid that if you step back and say large is bad, and we move to narrow banking, the impact of that on jobs, and on global trade, the global economy, would be very negative."
But this is a battle that will shape market capitalism for decades and amid his entourage French President Sarkozy gave his full backing to his US counterpart after some equivocal soundings from Paris, and laid down the law to the bankers.
President Sarkozy said: "I have to put the question to you, 'what is the role of a bank in the economy?' I've not said a dirty word. The job of a banker is not to speculate, it's to finance the growth of the economy," he implored his audience.
The British government position is not to back such moves, British financiers are beginning to worry where it is all going.
Lord Levene, the boss of City-based insurer Lloyds of London told Channel 4 News: "So we're told this time we're going to have the US and the UK, Germany and France all in it together, so where will everybody go? They will come to Switzerland. The regulation has got to be driven by the industry and not from the outside by the regulator."
The bankers are trying to seize back the initiative in this debate, Britain's role in that will be pivotal.
