Financial Times Editor Asks: Can banking Clean Up its Acts?

[Corey Dutton]

I discovered a great speech, corresponding post, and a video summary by the editor of the Financial Times that discusses the complex issues in the banking industry. Lionel Barber, the Editor of the Financial Times, seems to have mixed feelings about the true effects of new banking regulations. He suggests that the regulation of banks has served to create even bigger banking giants, and has thus increased the “too big to fail” problem. He also suggests that complex banking regulations have also inadvertently created a higher barrier to entry for new competitors in the banking industry.

Barber asks the question, “Risk does not disappear, so the question is, where is it going?” This refers to the new regulatory world in which banks now live. This world is completely foreign to the world they (banks) formerly operated in leading up to the crash. Some examples of these profound regulatory changes in the banking industry include:

1.Higher Capital and Liquidity Buffers

2.The Ever-Evolving Dodd-Frank Act

3.The Volcker Rule

4.Ringfencing of Investment Banking from Retail Banking

If this topic is of any interest to you, I suggest you read the entire speech and corresponding post right on FT.com by clicking on the source link below. But for now, what is your opinion on this topic? Can banking “clean up its act?”, and is the new regulatory framework solving the problem that many say is to blame for the financial meltdown in 2008?

Source: Financial Times: http://blogs.ft.com/businessblog/2014/05/can-banking-clean-up-its-act-a-speech-by-lionel-barber/

Posted by Corey Curwick Dutton