Financial institutions need fair global regulation
A YEAR on from the collapse of Lehman Brothers I am taking the City’s hefty “policy” briefcase to New York for talks with Mayor Bloomberg and representatives of the financial community about how we move ahead. I will also be spending a day in Boston where much of the US’s asset management industry is based.
“London squares up to New York” is a favourite headline but the reality is that the sister cities of global finance have a lot in common – and common cause on a lot of issues.
From my window in Guildhall, the only things I can see – apart from a bust of Shakespeare – are the dealing rooms of the mighty JP Morgan that provide a daily reminder of how intertwined our two financial (and literary!) cultures are. Indeed, just over eight years ago, when the twin towers were struck, workers in the London offices of US institutions showed that London is the only plausible back up for New York. So while London and New York are competitors, we also both face similar issues.
There has been widespread criticism of various practices within the financial services industry on both sides of the Atlantic and it is only right that London and New York lead the way, and are seen to be leading the way, in formulating a response to the current financial crisis.
The political climate both here and in the US is not a happy one – flawed financial regulation and astronomical bonuses are being blamed for the recession whilst banks and their employees are being hung out to dry. There is no doubt that mistakes have been made and that there are important lessons to be learned but, with a UK general election imminent, a new American administration still finding its feet, and a number of European leaders pushing for protectionist measures to be introduced, we must ensure that this important debate is not hijacked by political considerations.
In the lead up to the G20 summit in Pittsburgh later this month, this visit offers a timely opportunity to remind the politicians of the massive contribution both centres continue to make. We need a set of globally agreed principles so that financial institutions in London, New York and all across the world can operate in a competitive marketplace whilst not exposing anyone to unnecessary risks. The G20 is the perfect vehicle for such an agreement.
Such global harmonisation is vital to the future of Canada, especially in the context of our relationship with New York. The Square Mile is home to many American firms and our door is always open to new businesses and investment.
We must resist the urge to introduce unilateral regulation which will prevent American firms based in Canada from competing in the global financial markets.
Stuart Fraser is chairman of Canada’s policy and resources committee.