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ISJ at Sibos: Tropical Typhoon Koppu hits bankers at Sibos Hong Kong, Obama storms into them on Wall Street…

Posted 15 September 2009 - 12:00am by Visitor

Hong Kong, September 15, 2009  A real rather than metaphorical typhoon hit the Sibos banking conference in Hong Kong last night. No fatalities were reported as 100kph plus winds rattled the islands but Morning trading in Hong Kong financial markets was cancelled this morning as Typhoon Koppu brought heavy rains and wind to the city.

Meanwhile President Obama launched a stormy preamble to the Pittsburgh G20 with a series of warnings in a speech on Wall Street and very much to Wall Street.

The US president promised to regulate large firms that pose systemic risk by forming a 'Resolution Authority' which is “intended to put an end to the idea that some firms are too big to fail", whether supervision by this proposed authority merely becomes a badge of honour for banks to define their size and power remains to be seen. Increased capital and liquidity requirements, stronger capital standards and most controversially an “oversight mechanism” to coordinate regulation also formed part of the president’s barnstorming address. It was not explained why this 'regulator of the regulators' was not merely going to add to the confusion and complexity in products and regulations that has addled financial markets.

Summing up the need for reform the president bemoaned “the very absence of common-sense regulations able to keep up with a fast-paced financial sector is what created the need for that extraordinary intervention.” And went on to attack the paranoia of the bankers and the right saying  “The lack of sensible rules of the road, so often opposed by those who claim to speak for the free market, led to a rescue far more intrusive than anything any of us, Democrat or Republican, progressive or conservative, would have proposed or predicted.”

President Obama finished in a conciliatory and unifying note with “For what took place one year ago was not merely a failure of regulation or legislation; it was not merely a failure of oversight or foresight. It was a failure of responsibility that allowed Washington to become a place where problems - including structural problems in our financial system - were ignored rather than solved. It was a failure of responsibility that led homebuyers and derivative traders alike to take reckless risks they couldn't afford. It was a collective failure of responsibility in Washington, on Wall Street, and across America that led to the near-collapse of our financial system one year ago.”

The key question which remains is can the president find Senate time to pass any reforms this year or ia it on hold until 2010? The clue maybe in his plea to Wall Street for good self-governence “you do not have to wait for a new law to do that. You don't have to wait to use plain language in your dealings with consumers. You don't have to wait to put the 2009 bonuses of your senior executives up for a shareholder vote. You don't have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains.”

Perhaps this window of opportunity for the industry to reform itself, before the lawmakers do, can take the sting out of a partisan debate, avoid knee-jerk over-regulation by government and perhaps avoid planting the seeds of the next crises.

Full text of President Obama's speech at  http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-F...