http://www.reuters.com/article/2011...rbssFinancialServicesAndRealEstateNews&rpc=43 "Financial regulation will not prevent the next financial crisis and it can work against firms in financially sound countries such as Canada, Rick Waugh, chief executive of the country's No. 3 bank, Bank of Nova Scotia (BNS.TO), said on Tuesday." "New rules being put in place to govern the global financial system, such as Basel III, and the U.S. Dodd-Frank legislation, impose a one-size-fits-all model and are backward-looking..." "'Remember, prescriptive rules can be like (France's) Maginot Line, which of course was that very complex system built prior to World War II, based on the experiences of World War I, and of course, was not effective at all because of the newer methods of attack," he said." "Waugh, vice chairman of the Institute of International Finance, which represents 460 of the world's largest financial institutions, argued that those jurisdictions that were hurt worse than others in the crisis require greater changes and oversight than those that came out relatively unscathed." "No regulation, no rule, prohibited us from participating in subprime, CDOs, high-yield bonds, covenant-light loans, all of these toxic, toxic assets," Waugh said. "We chose not to participate, or if we did ... and we did make some mistakes, but at low levels, so it never put our bank at true risk." Waugh added that Basel regulations actually encouraged institutions to buy European sovereign debt, from countries such as Iceland and Ireland, because the rules did not require capital to be put up against it. "History has shown that no amount of prescribed regulation can replace sound management and principles-based governance, or a board or a management team who are accountable to the results to their shareholders," he said.
was it Waugh personally who was tapped on the shoulder or the bank ? and firmly told by the Bank of Canada sub-committee to stay the hell out of the US subprime market that Scotiabank was about to jump into with both feet
I don't know anything about the rules his 'worried' about all I know is more regulations, less profits. contrary to popular beleif, shareholder of banks are silent business partners and don't have any input into decisions that bank makes. Board of directors is hired by the CEO and a few hedge fund managers. Goldman Sachs network is global and even the Obama and Bernanke bow down to Goldman Sachs billions in cayman and Swiss accounts. Goldman Sachs associates and partners are the untouchables. the upper echelons of corporate american especially in wall street hedge funds and banks are closed network or syndicate 'family' with Goldman Sachs moles and rats and spies in every bank controlling the shots. Scotiabank CEO Waugh is a Goldman Sachs associate in the Goldman Sachs network.
In fairness Waugh there were requirements placed on Banks in the US with regard to sub-prime borrowers. These requirements effectively amounted to applying affirmative - action principiles to home lending. Not affirmative action based on race-but on creditworthiness of the individual. You see, home ownership became a universal right in the late 90's to early 2000's. Everyone has a right to a mortage-regardless of ablilty to pay. Canada wisely did not losen credit standards and go down this road. For this reason no Canadian Bank had to be bailed-out in the 08' meltdown.
Care to elaborate? From what I am gathering, his point is that many of the new regulations for banks won't help to prevent the next financial crises. He's also warning about over-regulation. Obviously there is a conflict of interest here because he's the CEO of a bank, and more regulation will hurt bank profits. But I do think Waugh's words have some credibility given Scotiabank's current and past history of healthy finances. I am not very familiar with the specific regulations coming down the pipeline for banks, so perhaps someone who is can chime in? Will the new regulation help to stem risk as intended? Or is it simply going to cause more bureaucratic waste?
There's only 1 bit of regulation banks need and that will sort out 90% of the problems - ALL securities/derivatives should be traded on an exchange and ALL should be marked to market. Do that and there's still plenty of money to be made although not as much because stealing and/or ripping off clients would be far harder - but don't worry, they'll still find ways
Do you think it was over-regulation that substantially contributed to the recent economic crisis? Do you think that Canada's banks fared remarkably well because of a loose regulatory environment? Scotiabank is the most international among Canada's banks. If I were a shareholder, I'd want it to play by a strict set of rules in order to prevent insiders gaming the system for short-term gain and personal compensatory advantage while possibly placing long-term solvency at risk.
Obviously regulation was adequate in Canada, and inadequate in other countries (USA, Europe). I am a shareholder of Scotiabank, and I am in favor of adequate regulation, which I believe is what is currently in place (as evidenced by Canada's strong financial system). But as a shareholder, I am concerned that new financial institution regulations are going to place unnecessary limits on the profitability of Canadian banks without decreasing the risk. So I'm looking for more information regarding any new regulations that might be imposed on Canadian banks. I think it's also worth discussing the merits of uniform regulations across all countries, whether they need stricter regulation or not.