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Barclays bank chief: Barack Obama may harm recovery
10 Feb 2010John Varley, chief executive of Barclays, today warned that President Obama's plans to cut the size and limit risk-taking by banks could damage the global economic revival.
“What I lament about the the US is that it has gone off on its own direction,” he told the powerful Treasury Select Committee of MPs. “We need convergence rather than independence of regulatory direction.
“A big member of the convoy has left it and gone its own way. That is bad for the world.”
He said the banking system had survived the crisis of the last two years but needed to be reformed further.
“The meteorite passed by without striking — thank goodness,” he added. “The worst of the banking crisis is behind us. Now we have to deal with the impact of recession. In the minds of the public, the idea of banks being highly profitable may meet disapproval. But in the real economy, it is vital banks take on the baton — they have to lead.”
Barclays took no UK Government money during the bailouts but benefited from moves such as quantitative easing.
Varley said taxpayers had a right to feel angry: “We must be able say to taxpayers you will not have to do that again. We are not there yet but the banks are much safer than they were two years ago.”
Varley, along with his fellow Barclays director Bob Diamond, has been one of the most vocal defenders of the combination of retail and investment banking.
He said: “I have seen the benefits of the investment banking and retail banking cycles being asymmetrical. It provides resilience. But at the same time, Barclays has never funded its investment banking business from retail deposits.”
He criticised US plans for creating smaller, narrow banks, saying: “Size is irrelevant. What matters is risk. Big banks have tended to be more stable in history. The system would not be served by making big banks smaller but by making all banks safer.”
Reader views (11)
It is time Pension and Fund Managers who have millions of Shares invested in the Banks took charge.
- Stan White, leeds, 10/02/2010 05:26
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break up all major banks; no bank should have a capitalization of over 1 billion pounds; stop hedge funds; regulate insurance and prevent exchange rate gambling; make financially related bonus's illegal and 100% taxable and cap bankers/ those involved in finance salaries to strict levels
- Mark, Newport Wales, 09/02/2010 23:46
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Obama was democratically elected by the American people, he is there to serve the people, not the interests of John Varley. JOHN VARLEY YOU ARE THERE TO SERVE YOUR CUSTOMERS. Start running the bank not trying to run the world economy. By the way give back to your customers those ridiculously high bank charges.
- Robin, Prague, 09/02/2010 17:15
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Excellent! Perhaps Mr. Varley can give us his worthy views on Iran, China, medical care in the US and why my dog barks when a banker goes by.....
- Johnproblem, Hackney, 09/02/2010 16:57
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I wonder if Ancient Wisdom can supply his qualification for his theory?
however, setting that sort of white van economics to one side, its worth pointing out Bob Kelly of Bank New York has recently said precisely the same thing as John Varley.
- Scotty, London, 09/02/2010 16:16
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Take note, Mr Osborne.
- Val Daniels, Mijas Costa, Spain, 09/02/2010 15:56
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If the banks hadn't been so greedy in the 1st place, they would not be in this situation.
- Greed, London, 09/02/2010 15:54
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John Varley - you are wrong.
Greed and excess is what has bought the banking system and our modern day economies to collapse. Obama is making the right moves now - and if this doesn't happen now, it will be economic meltdown. Look at the world econmies today, its suffering for 2 generations for 80% of the population around the world.
The most reserved banks and economies are the ones surviving.
Quit your job now - Barclays may be the next big headline.
- Ancient Wisdom, London, England, 09/02/2010 15:44
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Quote: We are not there yet but the banks are much safer than they were two years ago.
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Brilliant thinking; considering they were broke two years ago.
As an uneducated ignorant taxpayer; I thought we saved their skin?
We need modern banks and modern bankers like we need a hole in the head.
- Mickinlondon, london, 09/02/2010 15:44
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It would be difficult for John Varley not to defend the immense expenditure Barclays has made in investment banking/trading and banking through purchases. But attributing the word 'may' has as much worth as when we say could, should or even from as in pricing. They are all vacuous and of no consequence merely added because its the least emphatic.
The USA is in a mess on a multiple too large to say in comparison to Europe but the one thing it does is get on with decisive action and provoke results.
Here in the UK our banks have groiwn too powerful and Labour is scared of upsetting them which is why it's rgeulation and disciplining to date of them has been woefully inadequate.
John Varley is no fool but on this point he is way out off kilter with what's happening. One can only assume his comments are based on pressure from his colleague Bob Diamond who is seeking to defend the indefensible, primarily his mini fiefdom, which in todays world wont work.
The days of denying everything and come out fighting are past.
Today there are too many folk with past noses out of joint, made that way by bully boys of yesteryear who are prepared to stand up and say enough is enough.
What goes around comes around and John Varley and Bob Diamond ought to realise that more than many.
- Robert Marshall, LONDON, 09/02/2010 15:27
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What self serving comments! The more banks there are then there is less systemic risk, unless of course they all adopt the 'herd' mentality. And of course, bigger banks are going to be more stable, the problem here, which he neatly avoids, is that occasionally when they do fail the fallout is huge because they are so big!!!
- Matt Knight, Ware, 09/02/2010 14:15
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