What with the Jubilee and the Olympics, God Save the Queen may be getting an airing or two over the summer – well, we can all hope. But, surprisingly, it is just another example of why Wall Street is, while apparently on the same hymn sheet and speaking our language, singing a very different song to the City of London.
When Samuel F Smith appropriated the tune of our good old national anthem for his great patriotic hymn to America he enshrined the differences inherent in what George Bernard Shaw pointed out were, ‘two countries separated by a common language’. Time and again he’s been more right than simply clever.
I am just back from my annual trip to the United States, where we try to explain the current state of the nation to the bankers, brokers and policy wonks in Washington. While the UK is still hung up on the apologies that we gave ages ago – to a resounding lack of interest, I might add – and struggling to move on from pay and policy debates, the US is clearly getting over it. By which I mean getting over the recession and certainly getting past all the banker bashing.
Admittedly, the industry there is playing with a better deck. The economy has turned to the good. Growth is estimated to be heading towards two and three per cent. And what anti-bank rhetoric remains is all bound up in the sabre rattling that is going on around the Presidential election in November.
And, with that, comes an enthusiasm to look again at policies playing to the populist need for Uncle Sam to stay on top in any global battle for power and influence. Turning Wall Street into Skid Row is not the way to make friends and influence people – particularly in an election year. How different things are on this side of the pond where recent elections saw bankers an easy target in a blame game for the ballot box.
The US has woken up to the fact that some aspects of regulatory reform, such as the Volcker Rule, are not fit for purpose. Some of the top dogs are openly talking about ‘re-proposing’ while others are considering how to fix Dodd-Frank. The powers that be are actually thinking about the economic consequences of proposals to raise capital and boost liquidity. And they will say out loud that tighter rules won’t just squeeze the banks but constrict the flow of funds to business and the economy. I found these wide open spaces a refreshing change.
But the US does have a long reach and all too often others around the world find themselves caught up in its arms. For example, right now, if there’s no change, UK banks will be subject to both the ring fence proposed here by Vickers and the picket fence limiting wholesale activity set out in the Volcker rule. To be both Vickered and Volckered makes no sense at all, thanks very much.
Still, travelling in another country and listening to different views is certainly important. More than at any other time, in my experience, the focus has not so much been on US/UK relations but on what is going on in Europe. The persistent eurozone problems are viewed on a scale where suspicion that the EU constitutes the greatest risk to their economy is at one end and an absolute belief is at the other. Perhaps it’s not surprising that Americans have very little patience with the seemingly never-ending sovereign debt story.
I‘d like to say they had been really interested in UK politics, or what Boris would bring to his second term, but that would be a lie. Like Washington, that’s not for me. It was the French presidential elections which had caught the public imagination. Greece – occupying Aegean Seas of print here – didn’t even register there, although the situation in Spain is worrying many people, I suppose as a consequence of the high numbers of Hispanic Americans who see their own roots there.
Self-interest, and the need to appeal to your home electorate, underlines some of the key differences in how we are currently reacting to financial services. The US is reverting to pragmatism about banks and banking and the heat has gone out of the argument. They are concentrating on economic recovery and creating jobs and money with the result that the US economy is growing.
So, as I rode into the sunset, bidding farewell to the Fed, the SEC, the OCC, the CFTC, the FDIC, the CFPB, the Treasury and the Hill – the whole posse of authorities which makes our regulation look frankly easy – I left with some last home thoughts from abroad. The US has turned the economic corner. It’s no longer looking over its shoulder at past mistakes but, eyes front, is fixing things for the future. Maybe we should too.