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Bob Diamond on Stress Tests, Fin-Reg, and Capital (BCS)


President of Barclays PLC (NYSE: BCS) and CEO of Corporate & Investment Banking and Wealth Management, Robert Diamond spoke with FOX Business Network’s Liz Claman recently regarding the recent passing of Fin-Reg, European stress tests, and capital ratios.

On whether poorly managed banks made this fin-reg necessary, he said, “Barclays didn’t take any money. Barclays operated every single reporting period profitably. We were able to improve our franchise through the acquisition of the US businesses of Lehman Brothers. And yet all banks, Barclays included, have kind of been thrown into the same category. No one is angrier about poor risk management and poor management of financial institutions than those financial institutions that were well managed. Strong banks want strong regulation and we are all better off if we have strong regulation.”

Regarding the financial regulation bill, he said, “We did not get our way. The country found a balance. The financial markets found a balance. I have been Washington more in the last 6-9 months. There is a lot of talk about lobbying. And it was important to be on Capitol Hill with the key senators. And there are a lot of hero’s here. Secretary Geithner played a very important role, Senator Dodd played an incredibly important role, Congressman Barney Frank was incredibly important as well. To try and balance those two things; a safe and sounder system but how do we also drive economic growth, create an level playing field, and do not disadvantage US banks and US financial markets.”

When asked how useful the stress test was, he said, “With the challenges that Europe faces around the economy, transparency is a good thing. The stress test did stress sovereign credit ratings and sovereign prices it didn’t allow management actions. No two stress tests are exactly the same. This was definitely useful.”

As for if the new regulations will work, Diamond posited, “No tax payer money should be used to save banks or financial institutions and now we have a framework of regulation so we can really believe in that. I think it is time to stop looking backward in 2008 and start looking forward at 2010, 2011, 2012.”


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