January 30, 2010 / 11:27 AM / 8 years ago

Bankers, regulators talk, no concrete result

DAVOS (Reuters) - Bankers and policymakers reached some common ground on Saturday after months of recrimination over the financial crisis, but some expressed frustration that bank reforms were moving too slowly.

<p>CEO of NYSE Euronext Duncan Niederauer speaks during a session on Redesigning Capital Markets during the World Economic Forum (WEF) in Davos January 29, 2010. REUTERS/Arnd Wiegmann</p>

A closed-door informal meeting between dozens of top financiers and government officials, held on the sidelines of the World Economic Forum, saw few concrete proposals on the table, though the negotiations and informal brainstorming marked an incremental step forward, participants said.

“Each time people from the private sector and public sector from different countries get to an increased level of understanding I think that is actually quite valuable,” U.S. economic advisor Larry Summers said at the Swiss resort of Davos, speaking after the two-hour discussion.

Other participants, however, expressed frustration at the pace of change. Britain said banks, policymakers and regulators should move quickly on areas of accord, including the need to increase capital adequacy and so-called living wills, which would allow a quick wind-down of a failed bank.

“What has changed is there is an acceptance on the part of banks that they need to make changes and they need to make changes quickly,” Darling said in an interview.

“They have moved from a position of almost resenting public interference to one accepting the need to put their house in order.”

He warned there was a risk of losing the momentum for reform created by the global credit crisis and missing “a massive opportunity to return to growth.”

International Monetary Fund Managing Director Dominique Strauss-Kahn agreed: “It has taken 12 years to build Basel (rules) but we don’t have 12 years to build financial reform today. We need to speed up.”

BANK FAILURE AGENCY

The meeting focused on broad topics, according to an agenda seen by Reuters, including “Risk Assessment Systems” and “International Monetary System Reform.” Participants said they also debated some specific issues, including proposals for a central agency to manage bank failures.

“We want to have an authority or an agency which has the power, the funds, the budget and the competence to manage failure in an orderly way,” Mario Draghi, head of the Financial Stability Board, told Reuters.

But bankers said a global levy to allow the system to absorb a bank failure, a so-called “resolution fund,” was not the focus of talks and no agreement on it was reached.

That was only “one of a number of ideas,” Darling said.

One top banker who took part in the discussions also confirmed talks had broached the creation of a global “resolution fund,” but said this was an existing proposal.

“The purpose was not to reach a specific agreement, it was to discuss a range of issues,” the head of Britain’s Financial Services Authority, Adair Turner, said after the talks.

Brian Moynihan, head of Bank of America, described the talks as “robust,” as he walked out of the two-hour session which saw participants scribble their views on the timing and viability of reform proposals on post-it notes.

Saturday’s talks follow behind-the-scenes discussions between leading European and U.S. banks at Davos, at which they failed to reach agreement on how to fight back against a global push for tougher financial regulation.

Additional reporting by Clara Ferreira-Marques and Martin Howell, editing by Stella Dawson

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