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HSBC Chairman: Banking Crisis Far From Over

By Gene J. Koprowski   |   Monday, 06 Jul 2009 08:57 AM

After two years, the global financial crisis is "far from over," says HSBC Holdings Plc Chairman Stephen Green.

"We're almost two years into a financial and economic crisis which is far from over," Green told Bloomberg News. "We cannot even say we are past the worst."

The U.K. economy declined by 2.4 percent during the first quarter of this year, much more than anticipated, marking the largest contraction since 1958, according to the U.K.'s Office of Bank Statistics. The World Bank last week said that the flight of capital from developed nations is going to increase the ranks of the unemployed and poor around the globe.

Making banks smaller, and more focused, as many have proposed, isn’t the way forward, Green said.

"Customers, both businesses and individuals, need a wide range of services," Green said. "To force them to go to different types of institutions for different services, according to some resurrected Glass-Steagall model, would be totally unrealistic… a fantasy."

The British government, like the Obama administration in the U.S., is considering major regulatory changes, and may ask banks like HSBC, Barclays Plc and Royal Bank of Scotland Group Plc to put a "ring fence" around their securities groups so they could be shuttered without causing systemic risk to the entire banking world, according to news reports.

Green and other bank executives have other ideas.

Banks need a "significant increase" in capital for "certain circumstances, proportionate to risk," they say.

Other free market advocates are afraid that what regulators are proposing sounds a lot more like socialism than capitalism.

"One ominous part of the new regs is a proviso that would subject large, interconnected firms to consolidated oversight by a special Financial Services Oversight Council — a prospect that sounds like nationalization," Tim Cavanaugh, a columnist with Reason Magazine, wrote.

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After two years, the global financial crisis is "far from over," says HSBC Holdings Plc Chairman Stephen Green."We're almost two years into a financial and economic crisis which is far from over," Green told Bloomberg News. "We cannot even say we are past the worst."The...
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