Bankers still desperately seeking love
No Davos summit can be complete without some bank bashing and vigorous defences being mounted by chief executives and chairmen. This year, financial institutions got off relatively lightly at WEF despite a raft of fines over the past 12 months for market manipulation and dodgy deals.
United States investment bank JP Morgan took the brunt of the legal wrist-slapping last year, shelling out some $13 billion (CHF11.6 billion) to settle claims. No wonder then that CEO Jamie Dimon adopted a low profile in Davos, avoiding public debate.
Dimon did manage a media interview in which he slammed the US government for being “unfair”. Two days later, the bank announced Dimon would be paid $20 million for 2013, a year that saw JP Morgan’s profits slumped 16% due in good part to fines.
In a session entitled Rebuilding Trust in Finance, Credit Suisse chairman Urs Rohner admitted that “every little incident”, such as Libor rigging, “kicks back” public faith in banks.
“In good times and bad times people are not marching down the street saying ‘I love my bankers’,” David Rubenstein, co-founder of US private equity group Carlyle, told delegates. This is because finance does not “produce products that people can touch or feel”.
HSBC chairman Douglas Flint argued in another debate that finance is now the most regulated industry besides nuclear power.
But Anat Admati, professor of finance at the Stanford Business School, compared banks to a heavy goods vehicle racing through a residential area in the fog. Regulators have merely restricted the speed limit to 85mph, down from 90mph before the financial crisis, she complained.
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