Geithner pans UK light touch
US TREASURY secretary Tim Geithner yesterday hit out at what he said was “light touch” regulation in the UK before the financial crisis, and warned European regulators to take a tough stance on banks.
In an outspoken speech, Geithner said: “The UK’s experiment in a strategy of ‘light touch’ regulation to attract business to London from New York and Frankfurt ended tragically. ”
Geithner also urged Europe to match the US on financial regulation to stop emerging markets from undercutting global rules and encouraging arbitrage.
He said the US wants to avoid a “race to the bottom” around the world, where countries reduce regulation in order to attract business.
“As we act to contain risk in the US, we want to minimise the chances that it simply moves to other markets around the world,” Geithner said.
Asian markets including Hong Kong and Singapore could benefit from tough new rules in Europe and the US, as companies look for less-regulated business environments to operate in.
The US intervention is bound to raise eyebrows in the City, as Europe already has some of the toughest financial rules in the world on some issues, including strict regulations on bonuses, while sub-prime started in the US.