By Philip Ballard
DTCC President and CEO Michael Bodson participated in a panel discussion at the Bloomberg Washington Summit on Debt, Deficits & Economy on April 30, 2013.
The panel focused on U.S. fiscal policy and banking regulations and addressed issues relating to government response to the financial crisis, global cooperation, the size of banks and risk management. The panel, moderated by Robert Friedman of Bloomberg News, also included David H. McCormick, the former Treasury Department Under Secretary for International Affairs, and Gary Parr, Deputy Chairman of Lazard Investment Bank.
DTCC CEO Michael Bodson, left, speaks at the Bloomberg Washington Summit.
Bodson reminded the panel that after the 2008 crisis there was hope for a new era of harmonization across regulatory regimes. “Financial reform concepts were agreed to as guiding principles for achieving greater transparency and market stability,” he said. “Unfortunately, the execution has become so marketspecific that it’s really been an opportunity missed – both on a global scale and within the U.S. – for achieving greater cooperation among regulators and with the industry at large.”
Parr emphasized his views on the need for higher capital requirements as the best strategy to prevent the next crisis, rather than forcing banks to split up or not engage in proprietary trading. “Capital is the best measure,” he said. “The issue is how we measure it.”
McCormick stated his view that the industry is a lot safer today than it was before the crisis, although the harmonization of capital standards and market discipline is still needed to protect investors.
The discussion continued with lively exchanges among the panelists on the unintended consequences of regulations that seek to add safeguards yet may cause the system to become overly complex; the notion that regulators may be regulating the previous crisis rather than thinking ahead to avoid the next one; and the idea that even when risk is shifted from one party to another, it still exists and must be managed