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Bank group vows no return to business as usual
September 14, 2009 / 3:21 PM / 8 years ago

Bank group vows no return to business as usual

WASHINGTON (Reuters) - Financial firms recognize that two years of crisis have “profoundly shaken” confidence and trust, and some bank practices need to be reined in, a group representing some of the world’s biggest banks said on Monday.

In a letter to President Barack Obama, who is scheduled to speak on regulatory reform in New York later on Monday, the Institute of International Finance pledged there would be no return to business as usual now that the recession appeared to be coming to an end.

“The financial services industry is keenly aware that weaknesses and failures in certain of our business practices contributed to a grave and costly crisis, and is committed to doing our part to restore financial stability,” IIF officials wrote in a letter detailing policy goals for the Group of 20 leaders summit in Pittsburgh later this month.

“We fully recognize that confidence and trust have been profoundly shaken,” they wrote.

On the issue of banker pay and bonuses, which was a hot topic when G20 finance ministers gathered in London earlier in September, the Washington-based group said it shared concerns about compensation practices. It said most firms had made serious efforts to try to address the problem of employees getting huge incentives to take big risks.

The IIF said it would welcome guidelines that “create a level playing field for the industry, thereby helping to avoid a return to past practices.”

The group called on the G20 to develop credible strategies for removing financial supports and fiscal stimulus measures, pursue internationally coordinated regulatory reform, and develop systems for dealing with the failure of large financial firms operating in multiple countries.

The IIF said its members “fully agree” that levels of capital that banks must keep on hand to cushion potential losses ought to be increased and resources should be built up in good times that can be drawn down in times of stress.

“This should be done, however, with careful calibration so that the financial system retains the ability to revive domestic and international credit flows and support the real economy,” they added.

The IIF also proposed establishing a senior G20 task force to work with the International Monetary Fund on rebalancing global growth to ensure a sustainable recovery.

Reporting by Emily Kaiser and Lesley Wroughton; Editing by Neil Stempleman

Our Standards:The Thomson Reuters Trust Principles.
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