DAVOS, Switzerland If there is one place bankers should be able to let down their guard a little, you would think it would be at the World Economic Forum in Davos, an exclusive gathering of 2,500 of the globes financial and corporate elite.
Yet even here top banking executives found themselves on the defensive. Its a reflection of how big banks blamed by some politicians and the public for the 2007 financial crisis and the resulting recession are still grappling with pressure from recent scandals and moves toward increasingly complex regulation.
During a panel discussion on global finance at the forum, JPMorgan Chase CEO Jamie Dimon criticized the huge misinformation about the risks actually posed by banks.
He and other top bankers at the discussion, including UBS Chairman Axel Weber, found themselves stressing that that banks play an essential role in making economies grow by lending to businesses so they can invest and expand.
Banks continue to lend and grow and expand; finance is a critical part of the how the economy is run, he said at an all-star panel where he was challenged both by a top International Monetary Fund official and a hedge fund manager, whose firm is a client of Dimons bank.
Governments and regulators have moved to clamp down on banks and their risky practices since 2007. In the United States, legislation known as Dodd-Frank seeks to avoid taxpayer-funded bailouts of banks by barring them from engaging in risky trading on their own account.
The European Union is considering proposals to have banks separate their riskier investment banking operations from the rest of their business. Meanwhile, the British government is moving toward a different proposal to require banks to ring-fence their retail banking within their organization.
That sense of dissatisfaction about the state of banks and the attempts to regulate them burst through during the Davos global finance panel.
Min Zhu, the deputy managing director of the International Monetary Fund, said the banking industry was still too big compared to the size of the global economy.
Min also warned that other financial organizations, such as hedge funds, are playing a too-large, too-little regulated role known as shadow banking where risky practices that could cause a crisis remain beyond a regulators reach.
All the debate going on, and the financial sector has not changed very much, he said. Were not safer yet.
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