Big Banks Are Needed: Bob Diamond
There is no evidence to suggest that big is bad in the financial sector and regulators should not seek to break up the large banks, Bob Diamond, president of Barclays , told CNBC Wednesday.
"There is absolutely no evidence...to say big is bad or big is riskier," Diamond told CNBC at the World Economic Forum in Davos.
"Banks aren't big because they want to be big, banks are big because their customers need them to be big," he added.
"If the solution to this is narrow banking and small banks, the impact of that on economic growth and the impact of that on jobs is negative," he said.
Diamond is in favor of multinational, integrated regulation for the financial sector and said that most banks are encouraging and supportive of such proposals.
He pointed out that regulators already have the power to step in and break up banks during times of crisis, but said he does not think that is the right course of action.
"We don't believe that is the direction anyone is going in. We don't believe a re-enactment of Glass-Steagall makes any sense whatsoever," he said.
Roger Nightingale, strategist at Pointon York, disagreed with Diamond. He told CNBC that the Glass-Steagall banking act, which was introduced by the Fed in the 1930s to reduce speculation in the financial sector, should be reintroduced and made stronger.
"What Bob Diamond must do I think is sell off fund management, hedge funds, investment banking, proprietary trading, everything except money transition and banking," Nightingale said.
Major Multinational Financials Today:
Barclays (US exchange)
Bank of America
Disclosure information was not available for Diamond, Nightingale or their respective companies.