Outlook And so the fightback begins. You might say it was cowardly of the world's top bankers to wait until they had ducked behind the security barriers at Davos to come out swinging against regulatory reform, but until now no one has been prepared to put their head above the parapet. Strength in numbers was the feeling at the World Economic Forum yesterday, with a string of senior bankers speaking out.
The likes of Barclays' Bob Diamond and Deutsche Bank's Josef Ackermann have two separate gripes. They do not like the nature of the specific bank reforms that have been proposed – particularly Barack Obama's plans for breaking up "too large to fail" institutions – and they are also worried about regulatory arbitrage. With different countries in favour of different types of reform, the playing field is becoming uneven, they say – bad for the countries that the banks might leave in favour of softer jurisdictions and bad for the banks themselves, which have to cope with misaligned sets of rules springing up all over the place.
Steady on, chaps. We do not yet have a clear picture of how banking regulation will change in the light of the worst financial crisis in history (despite sniping in some quarters about kneejerk reactions). There have been one-off interventions, such as the UK's for-one-year-only windfall tax, but otherwise, the negotiations are continuing.
That there is not yet international agreement it is true. But away from the headline-grabbing announcements on breaking up the banks, serious work on capital adequacy and liquidity is being co-ordinated at at an international level. A Tobin tax and an insurance levy are almost certain to be global endeavours, if they are to be introduced at all.
Inevitably, different countries will feel that the idiosyncrasies of their own banking industries requires additional individual reforms (though the US's radical suggestions are long on hyperbole and short on detail, at least for the time being). Banking regulation has always operated in this way. By and large, however, there is a clear roadmap for reform being drawn up by the Bank for International Settlements in Basel.
If anything, the BIS's reaction has not been kneejerk enough. Earlier this month, the watchdog itself warned there were signs many banks were slipping back into the sort of aggressive risk-taking seen before the credit crunch. You might characterise that behaviour as making hay while the sun shines, ahead of an agreement on the shape of banking regulation going forward.
The bankers are entitled to contribute to the debate about how they are regulated. And there is always a danger, following a crisis, of over-reaction – to subject banks to too tight a straitjacket would be counter-productive for the global economy.
However, despite the whingeing breaking out at Davos, the response of policymakers to the financial crisis has so far been proportionate and considered. There has been widespread acceptance that the banking industry must be given time to adjust itself to a post-crisis world and that moving too quickly would be rash.
So much so, in fact, that there is a growing campaign for policymakers to be more radical in their thinking, often from some of the most unlikely sources. So you saw Mervyn King this week praise the US for being prepared to talk about radical reforms (though note that the Bank of England Governor didn't actually back Mr Obama's plans). And in Davos yesterday, George Soros described the banks standing in the way of reform as "tone deaf".
You can see Mr Soros's point. Davos was an obvious place for the banks to begin to come together to fight what they see as an attack on their prospects and profitability. Yet this year's World Economic Forum meeting is taking place right in the middle of the global banking industry's bonus season. The banks' complaints might just get a more sympathetic hearing were their staff not trousering whacking great windfalls once again.