World Economic Forum 2014: Overheard in Davos

By Bloomberg Briefs - 2014-01-22T18:19:25Z

Photograph by Jacob Kepler/Bloomberg

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Paul Singer

On the first day of Davos, Barclays CEO Antony Jenkins and HSBC Chairman Douglas Flint agreed that the financial system’s safety has improved in the past five years. Banks have three to six times more capital than they did before the financial crisis, and the quality of that capital is “significantly enhanced,” Flint said at a panel during which the two British bankers debated Paul Singer, the billionaire hedge-fund manager who runs Elliott Management, and Stanford University professor Anat Admati.

Singer, arguing the system was not safer, said banks still benefit from state subsidies, while Admati compared the overhauls implemented since the crisis to a five mile-per-hour reduction of a 90 mile-per-hour speed limit. “The ability to withstand shocks is much higher,” countered Flint. “If banks are getting a subsidy in their reference rate, then they are passing it onto society in terms of cheaper finance.”