As financial services continue to be at the forefront of public and political criticism, the increase in government regulation is partially welcomed by the least likely source: the banks themselves. “It is a myth that banks resist reform; banks want strong regulation,” Barclays PLC President and Barclays Capital CEO Robert E. Diamond told the audience at The NACD Directorship Forum. During a luncheon keynote address, Diamond said that banks need to operate with more capital, “but we need to manage the timing of implementation of measures so as not to damage the economic recovery.”
Diamond was among a distinguished roster of our nation’s decision makers in banking, government, regulatory agencies and stock exchanges convened yesterday at the third annual NACD Directorship Forum convened to discuss the most pressing issues facing corporate boards today. The day-long conference, hosted by the National Association of Corporate Directors and Directorship, brought together more than 150 public company directors at the Union League Club in New York City.
“The demands on directors today have never been greater. Boards are navigating a constantly changing environment where accountability and leadership is now personal,” said Kenneth Daly, President and CEO of NACD. ”The key take away today is the urgent need for directors to demonstrate exemplary board leadership, and as the voice of the director, the NACD is helping empower corporate boards including Dow Chemical, Kimberly-Clark, Aetna and Home Depot to lead the way in restoring public and investor confidence through principles-based board leadership known as the NACD Key Agreed Principles.”
Diamond Jr. delivered the Forum’s keynote address and shared his views on the current state and future prospects of the global banking sector, the pending U.S. financial reforms and how Barclays has navigated the recent financial crisis. Diamond sees banks playing a critical role in the private sector’s ability to drive growth and believes that it is a myth that banks don’t want regulation: “We support greater transparency in derivatives markets, but our clients (corporations, pension funds or governments) need customized derivative products for raising capital and managing risks. Funding and derivatives go hand in hand.”
Delegates at the NACD Directorship Forum also heard from Congressman Spencer Bachus (R-AL), ranking member of the House Financial Services Committee, who discussed the financial reform legislation currently in conference between the House and Senate and its implications for corporate boards.
This approach was reinforced by the panel led by Brian Breheny, deputy director for legal and regulatory policy in the division of corporate finance at the Securities and Exchange Commission along with former SEC Commissioners Paul Atkins, Annette Nazareth and Richard Roberts who discussed SEC activities, the current regulatory environment, shareholder activism and the impact on corporate governance. Opening remarks were made by former SEC Chairman Harvey Pitt.
Participants also heard perspectives from Duncan Niederauer, CEO of NYSE Euronext, who addressed the state of the financial markets, initiatives that have been taken since the global crisis and the current legislative and regulatory environment.
The NACD Directorship Forum concluded with a first-of-its-kind interactive session titled “Choose Your Crisis ” in which leading crisis experts looked at the disruptions facing global board directors at such companies as BP and Toyota. This engaging discussion will challenge world-class directors and advisors to respond to the diversity of issues involved including board/executive communications, legislative/regulatory inquiries, board/executive changes, litigation, shareholder activism and reputation management.
During the keynote address, Diamond also equated increased financial regulation with an eventual “boost” to private sector economic growth to “balance the necessary public sector action that the current economic situation requires.” He warned that government deficits need to be “tackled” by a reduction in public spending–resulting in an increase in private-sector growth. “If the private sector is to drive economic growth, it needs: access to funding; ability to manage risks; and to carry out business across borders,” Diamond said. The ever-global economy requires financial institutions to manage, not run from, risks associated with borrowing, foreign exchange rates and commodity price fluctuations. Global trade is key to an overall uptick in economic recovery. According to Diamond: “Big banks, properly managed, can have safer models and risk management than small ones.”
View the webcast of Diamond’s speech by clicking here.