Bankers to lobby against Obama's Wall Street reforms

THE TEMPERATURE is set to rise at the Swiss Alpine resort of Davos this week as senior bankers use the annual five-day summit of the World Economic Forum, which starts today, to lobby against the Obama administration’s proposed reforms of Wall Street.

Leading political and business figures will debate the theme of the 40th annual meeting at Davos: Improve the State of the World – Rethink, Redesign, Rebuild. However, many of the 2,500 delegates will use this gathering of more than 1,400 senior business executives, 250 public figures and 30 heads of state and government to influence opinion and conclude deals behind closed doors.

The financial crisis has shaken the “Davos spirit” as the upheaval in the world economy has undermined globalisation, free market economic principles and innovation, which were promoted at the Swiss confab over recent years.

Klaus Schwab, the German economist and founder of the think-in, told The Irish Times that the main challenge for participants this year was to develop “long-term and comprehensive solutions”. “The crisis has fundamentally changed too many things,” he said. “It was transformational and we are still dealing with the consequences of this.”

Bank executives are expected to take advantage of the access available at Davos to lobby more than 12 central bank chiefs against plans by US president Barack Obama to overhaul the investment banking model in the US.

HSBC chairman Stephen Green set the tone for Davos this year by criticising the inflated level and distorted structure of bankers’ bonuses on the eve of the meeting. He predicted that bank bonuses would in future be lower and more rationally calculated.

French president Nicolas Sarkozy, Spanish prime minister José Luis Rodriguez Zapatero and Shimon Peres, president of Israel, are among the government leaders due to attend Davos.

They will be joined by European Central Bank president Jean-Claude Trichet, Dominique Strauss-Kahn, managing director of the International Monetary Fund; and Larry Summers, director of Mr Obama’s National Economic Council.

Peter Sutherland, chairman of Goldman Sachs International, and Niall FitzGerald, deputy chairman of media giant Thomson Reuters – both regular visitors to Davos – are among the few Irish delegates to attend this year’s meeting.

As delegates arrived in Davos last night, PricewaterhouseCoopers (PwC) published the accountancy firm’s annual global survey of chief executives showing higher levels of confidence .

Some 81 per cent of 1,198 chief executives surveyed by PwC said that they were confident about the prospects for their companies over the next 12 months, an increase from 64 per cent last year.

Almost 40 per cent expect to increase staff numbers this year, while 25 per cent were planning to cut jobs over the next year, down from almost half last year.

Some 42 per cent of UK chief executives said they will hire or rehire this year.

“There is cautious confidence out there with a clear split between emerging countries and developed countries, which are more pessimistic,” said Ian Powell, senior partner of PwC UK.

Speaking on the publication of the survey, Ronan Murphy, senior partner of PwC Ireland, said that the country needed to rebuild “the enterprise culture” and restore competitiveness “to reposition Ireland as a prime location of choice for foreign direct investment”.

On the eve of the summit yesterday, the police commander in charge of security at the forum was found dead in his hotel room. Markus Reinhardt, 61, had been head of police in the Swiss canton of Graubunden since 1984. Initial police reports have ruled out any foul play.