Bankers from all over the world have gathered in Davos, Switzerland to discuss the economy and the latest proposals in reining in banks with reforms and new taxes.
They are using Davos to groom opposition to Barack Obama’s populist bank reforms.
Legendary financier George Soros called the plan to tax large banks “premature”. The head of Deutsche Bank claimed the moves to limit bank size would leave small players ill-equipped for global trade.
Russian Finance Minister Aleksey Kudrin dubbed Washington’s plans “tough”, but added he understood why Obama wanted to act.
“Today all countries are thinking about taxing bonuses in order to promote being careful with risks. Each country has its own approach. The Obama administration, I think, is taking the toughest approach. On the one hand they want to stimulate long-term analysis of risks, but at the same time, another purpose of this measure is to increase budget revenues. The government has spent a lot of revenue to rescue the banking system, so I think they’ll use this to cut the budget deficit. They can get $90 billion, which is a lot even for the US.”
Two lobbies have now taken shape in Davos, for and against the President’s plans.
This real business in Davos goes on in the corridors of the Congress Centre. Rival groups of powerful business leaders try to find people with similar views from across the world who can push through their agenda.
Experts say Obama has bowed to popular outrage at banker excess.
Ian Goldin, director of the 21st Century Institution, Oxford University, believes that the banking system needs to get back to its core function.
“I think there are ways that we can think about what these businesses are for, which is really to serve society. Obviously they are profit-making institutions – they need to make a profit – but the outrage at the levels of bonuses and others that the bank leaders have got and given themselves has not benefited the customers, has not benefited the shareholders. It’s really benefited themselves.”
Bankers who have amassed at Switzerland’s largest ski resort hope their icy reaction can freeze Obama’s scheme.
Obama warns “if these folks want a fight, it’s a fight I’m ready to have.”
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