Subscribe to this blog's feedCharles Goodhart of the LSE has spotted a similarity: both the current credit crisis and the 1982 developing-nation debt crisis involved Citi in a prominent role (not too much of a coincidence given the bank's size), and, more importantly, both involved Citi chairmen saying something they would very soon come to regret: Walter Wriston in 1982 announced that "countries do not go bankrupt", and Chuck Prince told the FT in July last year: "As long as the music is playing, you've got to get up and dance. We're still dancing."
Citi shareholders must act, Goodhart said: all prospective chairmen should be tested for their quotability, and any with a talent for phrasemaking should be passed over "in favour of someone more boring".
There was more serious commentary at the LSE's regulation conference on Monday.
Transparency was a popular word - "banks were too cautious in providing information, which ultimately came too late", said Philipp Hildebrand, the vice-chairman of the Swiss National Bank. "Banks in many ways were a black box - it was difficult to gauge creditworthiness quickly in a crisis".
But, Deutsche Bank's CEO pointed out, more information wouldn't be much use if it wasn't easily usable: "I wouldn't want to test most bank CEOs on whether they understood their own models. We need more transparency on the notional amounts, because everyone can understand them - not the netted or hedged amounts." (The obvious reference here is Jerome Kerviel, who managed to hide huge notional positions behind fictional hedging).
