Wednesday, February 17, 2010

Elder Statesmen Urge Tougher Regulation: Doomsday Scenario Laid Out

While the younger generation, visibly led by Goldman CEO Lloyd Blankfein, lobbies Congress against such regulation, their spiritual elders support the reform proposed by Paul Volcker and even more restrictions.

Meanwhile, JPMorgan analysts have outlined a worst-case regulatory scenario. What will happen if all financial regulatory proposals made by governments worldwide are implemented at the same time as the Basel Committee on Banking Supervision changes to capital and liquidity standards? JPM analysts concluded that major banks would see a significant decline in profitability. Deutsche Bank, Credit Suisse, RBS and other European banks would be hurt the most. Article overview from Financial Times - Access via Google News.

George Soros, William Donaldson, John Bogle and other elder statesmen of the financial industry made their fortunes in the 1970s and '80s, when financial institutions faced significantly stricter regulation. These power players are now pushing for a return to tougher rules, going against their younger counterparts. "I am a believer that the system has gone badly awry and needs massive reform," said Bogle, Vanguard founder and former CEO. The New York Times has more from these Street Vets.

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