(MintPress) – The consensus at the World Economic Forum’s 43rd Annual Meeting, where leaders of the world’s largest financial institutions are discussing the industry, is that the sector is still too complex and opaque. Meaning, bankers from all over the world are resistant to demands that the industry be more closely regulated after the financial crisis.
Bankers have been widely blamed for the financial crisis that shook the world in 2007 and resulted in the reduction of living standards in many parts of the world.
The conference, which is taking place in Switzerland from Jan. 23-27, has more than 2,500 participants from more than 100 countries, and includes heads of states or governments, plus leaders from the financial industry.
Min Zhu, deputy managing diirector of the International Monetary Fund (IMF), commented that part of the problem is that the financial services sector is simply too big to be regulated: “Why did we have such a huge financial crisis? Because the financial sector is too big. The banks moved into market-based activities, where it is more opaque and there are fewer regulations. The products are too complicated. We have a long way to go.”
But James Dimon, chairman and CEO of JPMorgan Chase & Co., was the only one to disagree, arguing that banks are not opaque, but are complex. “Businesses can be opaque. They are complex. You don’t know how aircraft engines work either … We’re doing the right thing.”
Dimon went on to defend banks, saying that “some banks were ports in the storm because they were strong and diversified … they helped countries survive.” And he expressed concern that regulators were “trying to do too much, too fast.”
“It is five years after the crisis, OK, and we still have not fixed a lot of things you are talking about. Part of the reason is that we are trying to do too much too fast,” he said.
Dimon recommended that all stakeholders sit down to resolve the issues facing the industry. “We have so many things coming. [We do not want] five more years of pointing fingers, scapegoating and using misinformation … and thinking we’re making a better system.”
Dimon, who last week took a 50 percent cut in pay and now makes $11.5 million, down from $23.1 million following a multibillion dollar trading loss in London, said that JPMorgan was not just a “fair-weather friend,” but has been there through both good and bad times. He cited examples such as the bank’s decision to lend the U.S. $15 billion net of collateral as well as derivatives to Spain and Italy. “It’s very easy to say ‘don’t take risk.’ We have to manage risk; something may go wrong,” he said.
There was also widespread disagreement on what the right amount of regulation looked like and whether or not global regulation would be possible.
But while the bankers argued over whether the banks role in the financial crisis was misconstrued in the media, many people across the world were still struggling with effects from the deepest recession since World War II.
An unidentified United Nations (UN) body also reported that the number of unemployed around the world will rise to a record 202 million this year, while many countries, particularly in Europe, struggle to post any growth at all.
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