Welcome to the first day of SmartBrief’s roundup of financial news coming out of the World Economic Forum Annual Meeting in Davos, Switzerland. Scroll to the bottom of this post to watch a selection of Wednesday’s panel discussions related to finance.
Somehow … banks have survived: After years of lamenting the onslaught of post-crisis regulations, bankers in Davos still appear to be breathing. Some are even making a profit. According to DealBook, some are even lauding all that regulation. “The bulk of the regulatory reform was much needed,” said Deutsche Bank co-CEO Anshu Jain. “Our own management would have taken us on the same journey.”
What about the 99%?: The over-arching theme of last year’s coverage of Davos seemed to be the schism between the 1% and the 99%. The tone is not as palpable in this year’s coverage. But that is not to say no one is talking about income inequality. Billionaire Jeff Greene says the jobs situation in the U.S. should cause Americans to take inventory on their lifestyles. “America’s lifestyle expectations are far too high and need to be adjusted so we have less things and a smaller, better existence,” Greene told Bloomberg.
IMF sounds the alarm over shadow banking; Rubenstein weighs another U.S. recession: International Monetary Fund deputy chief Zhu Min said the shadow banking sector now represents a huge threat to financial stability. “Non-financial corporations have raised $1.3 trillion (£860bn) through shadow banking in the US alone,” Zhu Min told the Telegraph. Carlyle Group boss David Rubenstein said he is concerned the U.S. might be staring down the barrel of another recession. “Typically we have had a recession about every 7 years, and we are now at the end of seven years. Something is going to happen in the U.S. that we’re not expecting,” Rubenstein said.
Enria says breaking up banks is about more than size: European Banking Authority Chairman Andrea Enria says size isn’t the only factor regulators should weigh when considering breaking up a bank. “The point to me is that we’ve seen significant problems caused by large complex institutions that had to be bailed out. In Europe we’ve also seen problems caused by small Irish banks or Spanish cajas. So the issue is, to me, resolvability,” Enria said, according to Bloomberg.
Axel Weber, Ken Rogoff down about the future of Europe: UBS Chairman Axel Weber has serious concerns about the economic future of Europe, according to the Telegraph. Weber went so far as to suggest the future of the euro may be in doubt. “There has been no competitive reform. Europe has lost the opportunity,” Weber said. Meanwhile, Harvard professor Kenneth Rogoff said he is certain Europe will soon find itself dealing with another crisis.
Moynihan says BofA is all in on cybersecurity: Bank of America Merrill Lynch CEO Brian Moynihan says the firm is sparing no expense in the cybersecurity battle. “The only place in the company that doesn’t have a budget constraint is that area because how would I know how to assess, why would I take my judgment and say you could do this cheaper,” Moynihan told Bloomberg News. That is all well and good, but sometimes battles are lost not because of a lack of appropriate spending but rather a lack of creative thinking.
Selected World Economic Forum videos from January 21, 2015.
The New Banking Context
Douglas Flint, Liu Mingkang, Anshu Jain, André Esteves, Brian T. Moynihan, Stephanie Ruhle
Forum Debate: Global Financial Stability
Martin Wolf, Urs Rohner, Andrea Enria, Pietro Carlo Padoan, Anat Admati