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 Thursday sounding almost like a statesman when he noted, “creating an environment conducive to economic growth and job creation is critical.
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.
John Defterios is CNN’s anchor for Marketplace Middle East. He will be blogging from the World Economic Forum at Davos this week. www.cnn.com/davos; www.cnn.com/mme.
