The Bankwatch

Tracking the consumer evolution of financial services

Beware of Greeks bearing Gifts

Beware od Danaos bearing gifts.
((Laocoön warned his fellow Trojans against the wooden horse presented to the city by the Greeks. In the Aeneid, Virgil gives Laocoön the famous line Equo ne credite, Teucri / Quidquid id est, timeo Danaos et dona ferentes)

With that famous line, the worry of surreptitious infiltration is captured, as we now know as the Wooden Horse of Troy.

When people accept a condition in the midst of a complicated negotiation with no apparent conditions beware.

When I read this headline “Bankers in favour of paying global fee” my immediate reaction, as an ex banker was. what!!!

Banking as it is designed anywhere in the world is based on a highly levered model supported by central governments.  The problem in the world as we work out of the crisis is leverage.  Banks are central to the problem.  Yet as head of a bank your targets are designed to maintain return on equity so any interference in the model is bad. 

Regulation is bound to reduce leverage in some way so the opportunity to have a fee imposed to all banks equally is manna from heaven.  The equilibrium remains. 

Written by Colin Henderson

January 30, 2010 at 23:11

Posted in Uncategorized

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