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Financial world needs more transparency:
Citigroup Chief
Tuesday November 08, 2011 11:26:31 AM,
Arun Kumar, IANS
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Washington: Citigroup's
Indian American Chief Executive Vikram Pandit says last week's
collapse of MF Global Holdings Inc. proves that the financial
world needs ever more transparency on disclosure and derivatives
as well as a better way to regulate non-banks.
Advocating putting derivatives on clearinghouses and exchanges,
Pandit Monday pointed to MF Global's European exposures, which
ultimately sank the firm, as an example of what can be improved by
greater clarity.
Speaking at a conference hosted by the Securities Industry and
Financial Markets Association (SIFMA) in New York, Pandit also
argued that financial players such as MF Global that are not being
regulated like banks, but which engage in banking activities, need
to be regulated the same way.
"Shadow banking is really important and prudential regulation
can't stop only at a few firms," Pandit said. "It does need
capital and other oversight. If you want to be in the business
that's the price you have to pay."
Shadow banks are financial firms that aren't subject to rules
applied to traditional banks.
MF Global, the holding company for the broker-dealer run by former
Goldman Sachs Group Inc co-Chief Executive Officer Jon Corzine,
filed for bankruptcy protection Oct 31 after making a $6.3 billion
bet with the firm's money on European sovereign debt.
Pandit said the current economic environment is still feeling the
effects of the last crisis in 2008, as the world continues to work
through the leverage that built up and caused the financial crash.
"We learned yet again what happened to the world when leverage
rises to levels that are unsustainable," he said. "We are still
living through that."
(Arun Kumar can
be contacted at arun.kumar@ians.in)
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