Amid growing fears of the economic crisis throughout the world, key leaders of financial institutions gathered all around one table to discuss causes and problems of the U.S. financial system during the 9th World Knowledge Forum on October 16th.
Speakers for the sessions were Global Head of Institutional Investments at Fidelity Michael Gordon, Vice Chairman of UBS Investment Bank Leon Brittan, Vice Chairman of the IB Division at Credit Suisse Paul Tregidgo, Vice Chairman of Global Banking at Citi Jeffrey Shafer, and President of Merrill Lynch Pacific Rim Jason Brand.
Under the theme of “New Architecture of the Financial System”, moderated by President of Korea Securities Research Institute Kim Hyung-tae, the world’s financial leaders tried to figure out what originated the financial crisis, if the power shift in the global financial market would occur, and what needs to be done in order to recover this crisis.
Among the five-member panel of experts, common responses for the root of the crisis came out: leverage, excessive debt, lack of regulations, and complexity in financial institutions. Mr. Gordon, who was the first person to raise an issue of leverage, emphasized that financial systems need to be changed from “complexity” to “simplicity” since lack of clarity in those systems create a big problem like the current financial meltdown.
Mr. Brittan also raised his voice in pointing out the U.S. financial regulatory system as problematic, and he suggested that the complex financial system needs to be restructured in the U.S.
While most speakers stressed the word, “leverage”, Mr. Shafer underlined a fundamental human nature as an origin of the crisis. He then said, “I am sorry to say this, but as we’ve seen it (the financial crisis) repeated in the past, it won’t be the last time.”
Regarding a question on what needs to be changed in the U.S. financial market, Mr. Brittan showed his skeptical view on an idea about establishing a new international institution to oversee the global financial system. He said that it is such a complex, time-consuming process until that new organization can function well.
When an issue regarding “power shift” was on the agenda during this session, Mr. Shafer and Mr. Brand brought up some examples of Asians being in high executive positions at large financial firms in the U.S., and it showed that Asia has a strong capacity to become the next world leader.
Nonetheless, the panel of financial experts came to an agreement at the end of session that Asia has a high possibility of getting an opportunity to become a new global leader since the U.S. economic system is falling apart.
[JYJ]
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