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.”