Hedge fund legend George Soros says President Obama’s new plan for bank regulation doesn’t solve the problem of "too big to fail."
The proposal would limit banks’ size and force them to give up some of their investment banking activity such as proprietary trading and owning their own private equity and hedge funds.
“Some of the banks will spin off investment banks that will still be too big to fail,” Soros said at the recent World Economic Forum, Bloomberg reports.
Soros also came out against Obama’s plan to tax banks that received bailout money.
Obama’s plan would be disadvantageous to tax banks before the financial crisis has fully ended, he says.
Others at the meeting also opposed Obama’s bank plan.
“I’ve seen no analysis that suggests shrinking banks and making all banks small or narrower is the answer,” said Robert Diamond, president Barclays bank.
Deutsche Bank CEO Josef Ackermann agrees.
“If you have fragmented, small players meeting the requirements of global trade and production, you will have a dichotomy which is not going to work,” he said.
Some experts, including Soros, have said that bank regulation must be global to be effective.
“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 quite capable of organizing themselves in such a way that if the regime is difficult in one country, they will go to another.”
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