Regulators have not received their fair share of blame for the
financial crisis, the former chair of Goldman Sachs Asset
Management has said.
|The BRIC creator
queried UK plans for a central share registry and jail
terms for bankers
Delivering the keynote at yesterday’s
Guernsey Funds Forum, Jim O’Neill,
creator of the emerging market acronym BRIC [Brazil, Russia,
India, China] queried how much faith could be placed in
"A lot of the damage of what we went through was
caused by bad regulation," O’Neill said.
While many constituencies contributed to the
financial crisis, he believes its seeds were sown by market
overseers, the majority of which still hold their positions
"Having worked in finance for 35 years, financiers
will do what they think they can get away with until getting
stopped or hitting a crisis," the economist said. "It is the
job of good regulation to take the punchbowl away before
He described the reactionary nature of rulewriting
as "fighting yesterday’s problems", and queried
financial reforms proposed by the UK government.
This includes jail terms for bankers found liable for reckless
misconduct. The popularity of the proposal, which features in
the Banking Reform Bill, concerns
O’Neill; especially when regulators themselves
have not necessarily paid the price for their shortcomings.
He also branded last week’s proposal for a public share
registry as a populist move. The change would scrap bearer
shares and force companies in the UK to publish a list of their
On its face, this is to improve transparency and
minimise tax evasion and money laundering. But
O’Neill described it as "an easy sound bite".
Commenting on Prime Minister Cameron requesting the
UK’s overseas territories and Crown
dependencies to make similar changes, O’Neill
said: "Whether he really has a personal view on it, I
" It is the job
of good regulation to take the punchbowl away "
It’s an example of the broader problem
plaguing western intellectual leadership, he said. Many in
positions of authority take the path of least resistance, doing
what will be well received rather than what is necessarily
Fiona Le Poidevin, chief executive of Guernsey
Finance, noted that a registry goes against the pursuit of a
level playing field of financial regulation. While the European Parliament has voted through similar
plans, they have not yet been adopted and no other
jurisdictions have announced similar intentions.
"I’ve been in China talking to people
about this, and they say 'we won’t go anywhere
near Europe if you are going to make all of our information
public’," said Le Poidevin. There are many reasons
why investors don’t want their details publicly
accessible, including human rights and data privacy.
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