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As government officials around the world work to stabilize the global financial system, some of the banking industry's most prominent leaders gathered to offer perspectives on how regulators can play a productive role in how banks take on and manage risks.
At last week's World Economic Forum in Davos, Switzerland, some of the biggest names in finance discussed what the future holds for banks. Financial institutions are working to come to terms with Basel III requirements (international banking standards), fend off cyberattacks, and determine sustainable business models, as top executives debated how to move forward. According to a news release, Min Zhu, deputy managing director of the International Monetary Fund, did not paint a bright picture.
"Why did we have such a huge financial crisis? Because the financial sector is too big," Zhu said.
While the crisis may have begun in 2008, Zhu doesn't seem to think that banks or regulators have done enough to repair those problems.
"We have a long way to go," Zhu added.
Also in the release, Jaime Dimon, chairman and CEO of JPMorgan Chase & Co., said that there are problems facing the banking industry that must be addressed. However, he didn't blame the size of the industry itself. Instead, he seemed unhappy with recent regulatory efforts to improve the health of the world's banks.
"We are trying to do too much too fast," Dimon said. "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."
Andrey Kostin, chairman and CEO of Russian-based VTB Bank, agreed. While Kostin indicated that regulation is necessary, he seems to side with Dimon on how to strengthen the industry.
"Everybody is blaming the banks," Kostin said in the news release. "Yes, we took too much risk, but we took that risk so that everyone could enjoy life. We should have better regulation, but not necessarily more."
What do you think? Does the international banking industry need more regulation? Or should regulators simply work to make existing standards easier to follow?
