Financial Regulatory Forum

By Martin Howell and Tamora Vidaillet

DAVOS, Switzerland, Jan 28 (Reuters) – Wall Street executives welcomed U.S. President Barack Obama’s plan to create jobs and a softening of his attack on banks, but questioned on Thursday whether proposals in his State of the Union address would become law.

Obama pushed job creation to the top of his agenda in his annual speech to Congress and vowed not to abandon his struggling healthcare overhaul after the loss of a key Senate seat in Massachusetts raised doubts about his leadership.

He renewed criticism of bankers’ “bad behavior” and of the recklessness that triggered the deepest crisis since the 1930s, but appeared to ease his assault on big banks.

“The market is probably relieved that he didn’t come out with some other nuclear attack on Wall Street,” John Studzinski, global head of the advisory group at Blackstone said.

Studzinski, a former investment banking boss, told Reuters on the sidelines of the World Economic Forum that he welcomed the plan to boost lending to small businesses, but said execution would be critical: “The devil is in the detail”.

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Hugo Dixon

DAVOS, Switzerland, Jan 28 (Reuters Breakingviews) – Nicolas Sarkozy’s anti-market rhetoric is misconceived. The French president used his address in Davos to blast the untrammelled free market. While the economic crisis has certainly exposed deficiencies in financial capitalism, this is largely because market forces were too weak rather than too strong.

Sarko had some easy targets. Top of the list were bankers. Their “heads-I-win, tails-you-lose” pay practices are an outrage. But these are not the result of the free market operating properly. They are the result of governments and central banks rushing in and bailing the industry out when it runs into trouble.

By Ben Hirschler and Martin Howell

DAVOS, Switzerland, Jan 27 (Reuters) – Global business leaders warned Western governments on Wednesday that a populist crackdown on the financial industry could crimp a fragile recovery from the worst recession since the 1930s.

The worried response to U.S. President Barack Obama’s plans to curb big banks and a British assault on bankers’ pay came as 2,500 business leaders and policy makers met at the World Economic Forum in the Swiss ski resort of Davos.

Surveys produced for the annual conference showed global economic confidence on the rise after deep gloom in 2009 and a cautious return to hiring, especially in emerging markets.

By Sven Egenter

ZURICH, Jan 26 (Reuters) – Private capital inflows to emerging markets are set to soar by two thirds this year as countries like Brazil and China drive global recovery and fuel “hot money” risks, the Institute of International Finance (IIF) said on Tuesday.

Emerging markets seemed to be aware of risks from short-term, yield-chasing cash inflows, the global banking association said. Mature economies need to come up with credible plans to tackle spiralling debt and liquidity, it said.

(more…)