Friday, January 13, 2012

Bankers remove an enemy

These days, bankers are so powerful that those who propose a fairer and less dangerous banking system are immediately fired. The tenets of banks are others can starve and die but we must have our bonus. The MSM quickly vilified anybody whom bankers deem threatening to the status quo.

Recently, such misfortune visits Phillip Hildebrand, the president of Swiss central bank, the SNB. The super-rich former hedge fund manager is accused of insider trading just because a currency deal of his wife netted -- a pathetic amount of US$83,000. He resigned.

People are being gorged by MSM to believe that Phillip Hildebrand is a bad guy. Political coup may be more accurate picture of the truth.

Below are from NYT on fights between Hildebrand and banks to save bankers from their own greed and to make the world a safer place.
Mr (Phillip M) Hildebrand, the president of the Swiss central bank, was called "arrogant" and "egotistical" by bankers quoted anonymously in the pages of Swiss newspapers. His supposed sin: Wanting banks to hold extra capital. The fact that Mr Hildebrand was himself a former hedge fund manager in New York seemed only to heighten the sense that he had betrayed his profession.

"He'll never find another job in Switzerland", the Swiss newspaper Der Sonntag quoted an unnamed high-ranking banker as threatening Mr. Hildebrand in 2010.

The unusually bitter attacks on a central bank chief were a measure of what was at stake. Mr Hildebrand, 48, had a high-visibility role in a struggle between bankers trying to preserve their most lucrative business practices and regulators trying to defuse a system that, many believe, nearly blew up the world economy.
In response, Mr. Hildebrand as well as top officials in the United States and Britain began trying to revive an old-fashioned idea, the so-called leverage ratio, as an extra layer of insurance in addition to tougher capital requirements for risk-weighted assets.

The aim was to set a minimum level of capital to be held against gross assets, regardless of estimated risk, to restrain the banks’ strong incentive to make optimistic assumptions and supercharge leverage.

Banks considered the leverage ratio a blunt tool, an insult to all the investments they had made in the last decade to create sophisticated risk management systems, as well as a threat to potential profits and payouts to top bankers.
But there was powerful resistance from organizations like the Washington-based Institute of International Finance, whose membership includes most of the world’s largest banks.

In Switzerland, Mr. Hildebrand pushed for local rules that would be more rigorous than the Basel rules. It was this push that inspired so much bile from the banks in 2010.
But circumstances were on Mr. Hildebrand’s side. As Swiss legislators were debating the proposals earlier this year, UBS disclosed that a 31-year-old employee had caused losses of $2.3 billion by making unauthorized trades.

No comments: