THE DAVOS DEBATE: MORE OR LESS REGULATION, MORE OR LOWER TAXES?

BBC:

The World Economic Forum in Davos has begun with bankers and regulators clashing on plans for more regulation.

"We need good regulation, better regulation but not more regulation," Lord Levene, chairman of the insurance market Lloyd's of London said.

Barclays head Bob Diamond also suggested that more rules would drive banks out of London and New York.

The debate comes after US President Barack Obama proposed breaking up banks that are "too big to fail".

"We need a strong financial centre in New York and a strong financial centre in London," said Mr Diamond. "This is a time when isolated actions in the UK and US are not constructive."

He added: "I have seen no evidence ... to suggest that shrinking banks and making banks smaller and narrower is the answer."

... Lord Levene told attendees that more regulation in the US and UK may drive banks and businesses to emerging financial centres - such as Singapore, Shanghai and Zurich.

He pointed to the huge influx of business into London after the US passed the Sarbanes-Oxley act following the Enron and Worldcom scandals. The move, aimed at holding company directors to account, led to higher costs and an increased threat of legal action for firms listed in New York, he said.

That led to record listings on the the London Stock Exchange in the years leading to the financial crisis.

"In the City of London, we want to build statues to Mr Sarbanes and Mr Oxley for all the business they gave us," he joked.

Lord Levene also criticised efforts to curb large bank bonuses - a source of public outcry in the US and UK. "Compensation is a side issue," he said.

IF HIGH TAXES AND A LOT OF REGULATION WAS GOOD, THEN WE'D ALL BE SPEAKING RUSSIAN AND DRIVING ZAPOROZHETS.

THE BUBBLE WAS CAUSED BY EXCESSIVE REGULATION:" THE USG DEMANDED THAT BANKS MAKE BAD LOANS, THEN HAD FANNIE MAE BUY THEM AND MAKE DERIVATIVES OUT OF THEM WHICH POISONED THE ENTIRE GLOBAL BANKING SYSTEM.

THE ANSWER IS LESS REGULATION AN NO BAILOUTS: LET BANKS RISK THEIR OWN MONEY WITH THE KNOWLEDGE THAT POLITICIANS WON;T BE ABLE TO MAKE TAXPAYERS BAIL THEM OUT.