Hedge fund icon George Soros says we need a worldwide financial regulator to keep banks in line across the globe.
“We need a global sheriff,” Soros said. He actually made that remark to The New York Times two years ago.
But now the cries are growing louder, and it’s not just Soros.
The worry is that if regulations don’t apply globally, banks will just go rule shopping.
They will locate themselves in countries where the activities they want to undertake are allowed.
“If everyone does their own thing, it will achieve absolutely nothing,” British Chancellor of the Exchequer Alistair Darling told The Sunday Times.
“The banks are global. They are quite capable of organizing themselves in such a way that if the regime is difficult in one country, they will go to another one, and that doesn’t do anyone any good.”
But the prospects for global cooperation apparently aren’t very strong.
Darling’s own colleague, U.K. Prime Minister Gordon Brown, recently dismissed the White House proposal to prevent U.S. banks from owning hedge and private equity funds.
“We don’t have that issue here,” Brown told reporters.
And Brown isn’t the only one critical of President Obama’s new plan to regulate banks.
MIT professor Simon Johnson told The New York Times that if the plan lets Goldman Sachs and Morgan Stanley revert to investment banks (they are now technically commercial banks), “they are still going to be too big to fail.”
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