G-20 Bank Push Risks Profits From Goldman to Barclays

Discussion in 'Wall St. News' started by ASusilovic, Sep 21, 2009.

  1. Sept. 21 (Bloomberg) -- Global leaders meet this week seeking to deliver the broadest financial regulation overhaul since the 1930s, potentially threatening profits and stock prices of banks from Goldman Sachs Group Inc. to Barclays Plc.

    President Barack Obama and his Group of 20 counterparts convene in Pittsburgh on Sept. 24-25 to cement a plan to force banks to curb leverage, hold more equity capital and keep a greater pool of assets that can be easily traded. Restraining bankers’ pay and narrowing imbalances in trade and savings will also feature on the agenda as officials try to hammer out an accord to prevent a repeat of the worst crisis since the Great Depression and ensure a sustained recovery.

    By limiting the scope of banks to invest and trade, governments may check this year’s 22 percent gain in the Standard & Poor’s 500 Financial Index. That may be a price they’re willing to pay to prevent a repeat of the risk-taking that sparked the collapse of Lehman Brothers Holdings Inc. a year ago, a worldwide recession and taxpayer-funded bank rescues.

    “Regulation will make banks less profitable by increasing the cost of doing business,” said Andrew Clare, a professor at Cass Business School in London and a former Bank of England official. “If banks are going to benefit from taxpayer largesse then they need to act in a way that doesn’t hurt taxpayers or the economy.”