He also supported the reform, which suggested Barack Obama. President of the United States at the World Economic Forum in Davos, said that the need to limit the size of bank assets.
In his speech at an informal luncheon Mr. Soros told journalists that the bankers of Wall Street are critical to this initiative .
Many representatives of the banking sector warns against increased government control.
head of Barclays Capital Bob Diamond said that “he sees no reason to reduce the size of banks and limit their activities. ” “This is hardly something to change” – he added.
Other bankers, in particular Jacob Frenkel of JPMorgan Stanley, said they worried about possible “low-quality control” of regulators.
analyzing the various attempts to overcome the crisis, Soros sufficiently praised Obama’s plan to divide the big banks, namely: to separate, for example, the investment unit and credit-deposit activity.
Even after “splitting” as proposed by the President of the United States, the majority of investment banks will still be large enough, said the financier.
order to somehow contain such large banks, as suggested by the Soros Foundation, all leading the housekeeper of the world must come to an agreement on financial regulation and develop uniform rules, in particular, impose strict limitations on the size of loans, which are attracted by these banks for investment projects.
Without the “global agreement”, the capital will be relatively easy to move to countries where regulation is minimal.
However, if all the world’s major economies will participate in such an agreement they will be able to implement the necessary controls on money flows and to prevent possible negative situations, for example the concentration of capital in a small country.
«giant bubble” – so called Soros the current economic crisis. This crisis was born of the existing financial system and the culmination of “bubbles of smaller size, which had accumulated over 25 years. Moreover, the current crisis is a direct consequence of erroneous actions to overcome the “relatively small crisis,” he added.
As regulators and bankers have a “misconception” about how to operate markets. They were blinded by their “ideology” of “market fundamentalism”, according to which markets are not in need of strict regulation and control.
Whenever the bubble bursts, the government and regulators more worsen the situation by lowering interest rates. As a result, a lot of credit to unreliable borrowers cracking the whole system.
Soros praised the two British experts – Edeyre Lord Turner, head of Financial Services Authority, and Mervyn King, the central bank – for the understanding of the crisis and the development of financial policies aimed at preventing its second wave.
easily obtain the money as a result of government support “Banks have become surprisingly quickly get out of the abyss,” said Soros.
However, banks have made a mistake. The bankers behaved as though the income is a result of their own labor and hastily awarded themselves bonuses, thus causing a political storm, reports the BBC.
From the viewpoint of George Soros, is to introduce high taxes on bank profit is strictly impossible, very early. “We have not got out of the forest” – he said.
hard enough to determine the appropriate “financial ceiling” for banks. Nevertheless, the authorities had sufficient time to develop s develop new principles of bank regulation.
