Bankers unhappy at G7 Politicians taking all the cake, enter tug-of-war.
A furious confrontation between Group of Seven financial leaders and the leading global banks took place when the two sides met at the US Treasury over the weekend.
Financial leaders, including Chancellor Alistair Darling, were stunned by the bankers’ lack of remorse in the face of the credit crunch.
Instead of expressing regret for the sub-prime mess the bankers proceeded to lecture the G7 on the need to keep credit markets open, through central bank actions, and to avoid any new regulation.
Among the bankers present was Barclays’ Bob Diamond, Britain’s highest paid executive, who did little to enhance his reputation among officials.
The bankers had been invited to join the G7 for an unprecedented summit on what the International Monetary Fund describes as the worst financial crisis since the Great Depression.
They have been warned by Donald Kohn, vice- chairman-of America’s Federal Reserve that the crunch is not over. ‘The turmoil has not settled down yet,’ Kohn said. There is still a fragile situation.’
The tide among regulators is moving against the banks. ‘We need a better balance between market disruption and regulation,’ argued Tim Geithner, the New York Fed official who forged the rescue-for Bear Stearns in February.
‘I don’t believe anyone looking at the system today would think we have got the balance right.’
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