Speaker: Professor David Llewellyn (Chairman, Board of the Banking Stakeholder Group, European Banking Authority)
Recorded: Wednesday 28 October 2015
One of the most serious banking crises ever has been followed by the biggest-ever change in the regulatory regime in terms of strategy, structure, coverage, and detailed rules. We review the nature of the regulatory response to the crisis both in terms of attempts to lower the probability of bank failures and minimise the costs of those bank failures that do occur. The symbiotic relationship between bank business models and regulation (with causality running in both directions) is considered: are regulators always shooting at a moving target that moves because of regulation itself? If so, what are the implications for future regulatory strategy. In this context we also consider the key issue of the relationship between regulation and bank culture and ethical standards, and review the limitations of regulation if the culture of banking is not reformed. The absence of reform in the underlying culture of banking is likely to produce yet more draconian regulation. Bankers may be drinking in the Last Chance Saloon.
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