Europe
Sarkozy backs financial regulation
French leader blames unrestrained markets for financal crisis at Swiss economic forum.
Last Modified: 28 Jan 2010 12:50 GMT
The forum is to be attended by 2,500 top politicians, captain of industries and civil society leaders [AFP]

Nicolas Sarkozy, the French president, has criticised unrestrained free-market capitalism and "indecent" pay for finance executives at the World Economic Forum in Davos, Switzerland.

Sarkozy, giving the keynote address on Wednesday, backed Barack Obama, the US president, in his plans to clampdown on banks and described how free-market capitalism caused the financial crisis of the past two years.

"From the moment we accepted the idea that the market was always right and that no other opposing factors need to be taken into account, globalisation skidded out of control," he said.

Without state intervention to support the financial system there would have been "total collapse.

"Obama is right when he says that banks must be dissuaded from engaging in proprietary speculation or financing speculative funds," Sarkozy said.

Economic recovery

The French leader's speech contrasted with much of the tone on the opening
day of the five-day conference, where business leaders warned that a flood of new regulations risked jeopardising a global economic recovery.

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"Let's get good regulation, better regulation, but not more regulation,'' Peter Levene, chairman of the British bank, Lloyds, said.

Josef Ackermann, the chairman of Deutsche Bank, said "we will all be losers'' if governments regulate markets too fervently.

Sarkozy called for better economic governance, worker protection, public debt reduction and rules against tax evasion.

He said excessive profits would no longer be tolerated when they have no relationship to the creation of wealth and jobs, and praised Gordon Brown, the British prime minister, for proposing a tax on them.

Taxing the "exorbitant profits of finance to combat poverty" would "contribute to putting us on the path of a moralisation of financial capitalism," Sarkozy said.

Sarkozy speech came just hours before Barack Obama, the US president, first State of the Union address, where he is expected to address reforming Wall Street.

Source:
Agencies
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