Group of Seven financial leaders, meeting in a small Arctic town so remote that the usual anti-globalization protesters did not show up, continued to demonstrate the impossibility of a global consensus on financial regulation.
U.S. Treasury Secretary Timothy Geithner showed up with the Obama administration’s new plans to put new taxes on financial institutions and new curbs on proprietary trading at commercial banks. The Europeans, whose megabanks were the very models for unitary banking supermarkets like Citigroup and JP Morgan Chase, basically laughed off the plan.
On the one hand, this is another demonstration of how badly the Obama administration bungled the introduction of the new regulations. Rather than seeking consensus with other foreign leaders, it presented the plan to the American public first. That kind of populist move against banks might win back public favour for the administration but it alienates European political types who like important decisions to come out of policy-making bureaucracies.
On the other hand, the new policies probably never stood a chance with the Europeans. They see their mega-banks as a strategic competitive advantage. And they generally view their financial institutions as healthier than the Wall Street firms. There’s probably no way they would ever consent to the kind of institution-breaking the Obama administration has proposed.
You’ll notice that both those hands are basically slapping the administration’s plan in the face.
For more of the blather signaling continuing to do nothing coming out of the cold North, check out Meena Thiruvengdam’s report for the WSJ.