QWANZ

Bankers Face a Harsh Spotlight in Davos...   >>>

Bankers Face a Harsh Spotlight in Davos



By JACK EWING

Published: January 24, 2010



FRANKFURT — Bankers are trickling back to Davos, but they will not be strutting quite the way they used to.



With a global economic recovery under way, the financial elite will not be in hiding as they were last year, when only a comparative handful showed up in Davos, Switzerland, for the annual World Economic Forum. But they will still be on the defensive. The prospects of tighter regulation, which seemed to be fading only a few months ago, look more likely than ever before.



Amid popular outrage about soaring profits and bonuses, political leaders and economic policy makers seem intent on making progress toward some kind of global rule book that would prevent another bank-led meltdown of the financial system.



“We cannot afford to have a financial system which is as fragile in the future as it has proved to be in the past,” the European Central Bank president, Jean-Claude Trichet, said this month.



The world’s top bankers will arrive in Davos just as the political mood in Washington and other capitals is turning against the financial industry again. Last week, President Barack Obama called for laws to keep financial institutions from becoming too big, as well as restrictions on risky practices that include betting bank capital on securities markets.



In Europe, leaders are also responding to voter frustration at having to pay for bank bailouts even as unemployment continues to rise.



The governor of the Bank of England, Mervyn King, has raised the prospect of breaking up the big financial institutions in the country. Britain and France plan to tax banker bonuses, while European Union officials are working on a regional bank regulation agency.



Some bankers say they support new rules, at least in principle. The chief executive of Deutsche Bank, Josef Ackermann, a co-chairman of the World Economic Forum, said in a video posted to YouTube that he favored new regulations on the amount of capital banks were required to hold, as well as better mechanisms for winding down sick institutions.