Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Christine Lagarde gets tough on Wall Street  Join our daily free Newsletter

MENAFN - Arab News - 22/01/2013

No. of Ratings : 0
Add to Mixx!


 


(MENAFN - Arab News) Watch out Wall Street and look sharp, City of London - one of the sheriffs of global capitalism is riding into town.

An elegant Frenchwoman with a shiny silver bob and the smooth manners of a veteran Cabinet minister and white-shoe lawyer, Christine Largarde, the managing director of the International Monetary Fund, doesn't conform to the most common stereotypes of a tough law enforcer.

But, on the eve of the World Economic Forum - the chummy annual gathering of the world's business elites in Davos, Switzerland - Lagarde delivered a strong call for firmer financial regulation around the world.

Speaking at a news conference, Lagarde decried the "waning commitment" to tighter financial regulations and said that finishing the post-2008 effort to fix the world's banks should be one of the three economic priorities in 2013.

In an interview afterward, Lagarde elaborated on the theme, warning that robust lobbying threatened to weaken the efforts by regulators and legislators to force banks to hold more and better capital against their loans and to be more transparent.

"I see a lot of pressure coming out of the industry," she said.
A former corporate lawyer, Lagarde isn't naive about that muscular lobbying, or unsympathetic to its motivations. It is, she said, "clearly part of their jobs. They will naturally lobby to support more flexible, more accommodating regulations."

But because of the special role of finance in the economy - including the special support the state gives banks in times of trouble - the "sector warrants stronger regulation and stronger buffers against potential risks and regular tests of their capacity to resist shocks."

"We believe," Lagarde said at her news conference, "that it is important for regulators, for supervisors, for authorities to resist aggressive industry pushback."

In our conversation, Lagarde was quick to rebuff some of the bankers' arguments against stronger financial regulation. When I asked her whether the weak world economy was a reason to delay tougher rules, she was uncompromising, repeating her point twice for emphasis: "It's always the wrong time here. It's always the wrong time."

She was equally firm when I ventured the complaint of some US banks that the contested Basel III regulations that set rules for banks around the world were anti-American and placed an unfair burden on US companies.

"You know, when I was sitting on the other side of the pond, I heard exactly the same story from the European banks, that it was anti-European and overly pro-American," Lagarde said. "So I'm sure there must be something right about it. I think the Basel committee is trying to do as good a job as it can and is trying to resist the pressure. I certainly hope that it continues doing so."
It is just a little more than four years since a financial crisis ripped apart the world economy, destroying millions of jobs and stunting millions of lives.

Those wounds are still so fresh that you may be surprised to learn that banks, whose risky behavior caused the crash in the first place, would be putting up much of a fight at all against tighter rules.

"It's human nature," Lagarde told me. "The moment the situation improves, you tend to forget about the hard times. And on this occasion, I think it is the job of policymakers, of supervisors, of regulators to constantly have that in the back of their mind and as an objective to avoid a relapse of what happened back in 2008."

The major current battle is about capital - how much banks should hold and how liquid it should be. Lagarde sees two other big fights in the offing.

One is the regulation of so-called shadow banking, the vast world of financial transactions that are done outside open exchanges, hidden from public balance sheets or conducted by nonbank financial institutions.

"Shadow banking is clearly developing at a steady pace," Lagarde warned in our interview, and "currently escapes a degree of regulation and supervision."

Lagarde's second worry is what she called "forum shopping" or "fragmentation."

This is the Gerard Depardieu story on an institutional level. Just as today's globalized world allows the French actor to cross borders and trade passports to escape high French taxes, global financial institutions can "shop" for the national home base that provides the lightest regulation. But while that may be good for individual bankers and their firms, it is dangerous for the world economy.

This distinction between what is in the interest of the banks and what is in the public interest was at the heart of Lagarde's comments.

Before 2008, a lot of people - politicians, journalists, regulators - conflated the two.

Particularly in the US and in Britain, General Motors chief Charlie Wilson's argument that what was good for GM was good for America started to feel true about the economic powerhouses on Wall Street and in the City of London.

Lagarde runs the world's most important public global financial institution. When most of us think of the IMF at all, it is usually as the stern enforcer of the sometimes harsh rules of international capitalism. That's why we should take Lagarde's call for tougher financial regulation particularly seriously.

"My hope is that it's improved for the public interest, not for the banks' interests," she told me.

"And those are not necessarily one and the same?" I asked. She responded definitively and with a warm laugh: "Of course not!"

- Chrystia Freeland is a Reuters columnist. Any opinions expressed are her own.

 






  MENA News Headlines
Apr 16 2014Air Arabia takes over as RAK official carrier ,MENAFN
(MENAFN) Air Arabia said that it will commence flights from Ras Al Khaimah (RAK) early next month, Arabian Business reported. The Sharjah-based carrier said that it will take over from RAK ...

Apr 16 2014Dubai Metro passengers hit 40.5m in Q1 ,MENAFN
(MENAFN) Passenger traffic on Dubai's Metro increased to more than 40.5 million in the January-March period of this year, Arabian Business repoted. The Roads and Transport Authority (RTA) said ...

Apr 16 2014Etihad, Fiji Airways ink codeshare deal ,MENAFN
(MENAFN) Etihad Airways and Fiji Airways have signed a codesharing agreement which allows reciprocal ticket sales between them, Arabian Business reported. Etihad said that the revenue from ...

Apr 16 2014Qatar's investments in infrastructure worth USD182.21 b ,MENAFN
(MENAFN) Qatar is planning to invest USD182.21 billion in infrastructure, avoiding projects in oil and gas sector, in the next five years, Minister of Economy and trade said yesterday, The Peninsula ...

Apr 16 2014Kuwait- GIC chief participates in ABANA Summit panel discussions ,Kuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) Shafic Ali, head of the Principal Investments Group at Gulf Investment Corporation (GIC) late Tuesday participated in a panel discussion on (Emerging Trends in ...

Apr 16 2014Today in Kuwait's history ,Kuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) 1961 -- First edition of "Al-Rai Al-Aam" newspaper hit the stands. 1962 -- Kuwait joined the United Nations (UN) Commission on Narcotic Drugs. 1972 -- The Amir ...

Apr 16 2014EU voices concern over increase of terrorist attacks in Nigeria ,Kuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) EU High Representative for foreign affairs and security policy Catherine Ashton late Tuesday "strongly condemned" the abduction of more than 100 school girls in ...

Apr 16 2014Reporters Without Borders says three more pressmen killed in Syria ,Kuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) Three more journalists have been killed by gunfire in the Syrian town of Maaloula, north of the capital Damascus, press freedom organisation Reporters Without ...

Apr 16 2014Three-day Sports Media Seminar begins in Doha ,The Peninsula
(MENAFN - The Peninsula) A group photograph of Arab sports journalists seen with TV personality Saad Al Rumaihi, Mohammed Al Malki, President of Qatar Press Sports Committee (QPSC), at Marriott Hotel ...

Apr 16 2014Prisoner's freedom sought for abducted Jordan ambassador ,Arab News
(MENAFN - Arab News) Tripoli: jordan's ambassador to libya was kidnapped on tuesday by gunmen who demanded a radical militant be released from a jordanian jail in exchange for the diplomat's ...

Apr 16 2014Saudi- Qur'an contest to be held in Jeddah next month ,Arab News
(MENAFN - Arab News) The saudi society of the holy qur'an and its sciences (tibyan) is going to hold a qur'an contest involving 60 universities from the public and private sectors next month in ...

Apr 16 2014Saudi- Philippines participates in Riyadh Travel Fair ,Arab News
(MENAFN - Arab News) The riyadh travel fair kicks off here in the kingdom tower on tudesday.the philippines will be represented by the department of tourism (dot) representatives glenn raymond ...

Apr 16 2014Saudi- New arbitration center hailed by leading figures ,Arab News
(MENAFN - Arab News) Lawyers legal arbitrators and businessmen described the decision to establish a saudi commercial arbitration center which was approved by the council of ministers in its ...

Apr 16 2014Saudi- Prices of fruits vegetables in Jeddah rise ,Arab News
(MENAFN - Arab News) There has been a 50-percent increase in the price of fruits and vegetables over the past 10 days due to an imbalance in supply and demand said esmat abuzinada head of ...

Apr 16 2014Private schools urged to use fingerprint systems ,Arab News
(MENAFN - Arab News) A number of public schools have applied the biometrics attendance system on students in line with the ministry of education's new regulation.the new system electronically ...

Apr 16 2014Saudi- Exhibit to showcase 1000 paintings ,Arab News
(MENAFN - Arab News) Arabian wings (aw) will kick off fiesta 1000 a display of 1000 paintings in jeddah on thursday at the al-furusya yacht club. 'the project has received support from different ...

Apr 16 2014Saudi- Technology remains core criteria for university education ,Arab News
(MENAFN - Arab News) Technology has become a core component at higher education institutions said higher education minister khaled al-anqari on tuesday during the opening address of the fifth ...

Apr 16 2014Saudi- Sponsors to pay fines for illegals ,Arab News
(MENAFN - Arab News) The labor ministry on tuesday announced extra measures to stop illegal visa trade and streamline the labor market. a senior official said saudi sponsors involved in the ...

Apr 16 2014Mentally ill kills family of 4 before ending life ,Arab News
(MENAFN - Arab News) A sudanese man his wife and three children were found dead in their apartment in riyadh on monday the police said.'preliminary investigations showed that the 46-year-old head ...

Apr 16 2014'My Saudi posting was a blessing from God' ,Arab News
(MENAFN - Arab News) Outgoing indian consul general faiz ahmed kidwai who is leaving after serving here for three years says it was a 'blessing from god" to have had a posting in saudi arabia.in a ...

more...


 
Click to Apply






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help