World Economic Forum
The 2010 World Economic Forum in Davos, Switzerland, officially got underway yesterday, and is already causing bankers and regulators to clash over certain proposals. French President Nicolas Sarkozy has already called for the restoration of a "moral dimension" to free trade.
In his keynote speech to attendees of the forum, Sarkozy called for a "fundamental rethink" of capitalism. "We need deep profound change," he warned, saying that in the aftermath of the global financial crisis, anything but change would merely show "tremendous irresponsibility" from world leaders.
The call from Sarkozy, which got the World Economic Forum (this year in its 40th year) off to a particular quarrelsome start, doesn't come as a massive surprise. In fact, France has long supported proposals that would force banks to hold more capital and curb bonus payments.
Sarkozy's hopes for reform did get a boost at the end of last week though, after US President Barack Obama made proposals that would limit the size of US banks. Under his plan, key financial institutions would be prevented from owning hedge funds, and US banks would also be barred from proprietary trading - the act of investing to make a profit for themselves, rather than on behalf of their consumers.
However, after Sarkozy's speech yesterday, which was met by scattered applause, reports began to surface that bankers in Davos were less than pleased with the ideas being put forward. In fact, the BBC highlights that, earlier in week - on Wednesday - Barclays boss Bob Diamond had warned that there was "no evidence to suggest that shrinking banks and making banks smaller and narrower [was] the answer."
Sarkozy, meanwhile, continues his protests undeterred: "We are not asking ourselves what we will replace capitalism with, but what kind of capitalism we want?
"We must re-engineer capitalism to restore its moral dimension, its conscience. By placing free trade above all else, what we have is a weakening of democracy."
The French President also once again hit out against huge bank bonuses that have caused public outcry in the US and UK - though he did admit that those who ran companies that made money deserved to be compensated well.
"There are remuneration packages that will no longer be tolerated because they bear no relation to merit," he said.The debate on renumeration and reform then, it seems - much like the annual meeting in Davos - goes on.
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