David McCormick, co-president of the world’s largest hedge fund, Bridgewater Associates LP, said recent moves by regulators in global financial centers are “yellow flags” for the threat of protectionism.
“We’ve had 35 years of globalization,” said McCormick, a former Treasury under-secretary for international affairs, at Bloomberg’s Washington Summit today. He said that it’s “by and large a bad thing” to see individual countries now seek their own regulatory solutions as global efforts bog down. He pointed to an “isolated, U.S.-centric” bill from senators to mandate a 15 percent capital cushion for the biggest banks.
McCormick, who was an aide of former Treasury Secretary Henry Paulson during the 2008 financial crisis, said banks still face a “huge degree of uncertainty” from slow implementation of rules, which five years after the crisis means “we still don’t know answers to a lot of really important questions.”
He said the Federal Reserve has taken the best choice among bad options for pushing liquidity. Deleveraging tends to be a “multi-decade” effort, he said, “so I think unfortunately, we’re five years into what will probably be a 10- to 20-year path in the developed world.”