Little Real Argument on Capital Rules: Barclay's Exec
Banks and regulators agree more than they admit publicly about new recommended capital requirements for G20 nations, Barclays President Robert Diamond told CNBC Wednesday.
“It’s disappointing to see the blame game,” said Diamond, who was speaking from the Barclays PGA Golf Tournament in Paramus, NJ, which ends Sunday.
Diamond was referring to some of the back and forth between banks and regulators about the requirements for the G20, the world’s major economies, recommended by the Basel Committee on Banking Supervision.
In a recent issue of the Financial Times, Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation, argued that boosting banks' capital requirements is exactly what needs to be done to prevent another financial crisis. Bair said critics are wrong in claiming that higher capital pools will stifle lending.
On the opposite end of the spectrum, Citigroup CEO Vikram Pandit told CNBC that when companies are forced to raise capital, that money comes from the lending pool.
“The truth is that banks have increased capital, they have reduced leverage,” said Diamond. “In our case, our core equity went from 5 percent to 10 percent, and Tier 1 equity went from 7 [percent] and change to 13 percent. The leverage ratio went from the mid-30s to 20 to 1.
“So I’m talking about Barclays as a representative of a number of big successful banks.”