DAVOS, Switzerland — Regulators from the world's major developed countries told bankers far and wide in Davos on Saturday that greater regulation is on the way, a defensive move aimed at avoiding a repeat of last year's financial meltdown that dragged most of the world into recession.
U.S. Rep. Barney Frank, D-Mass., said a bank tax and other tough new measures would be introduced by the individual countries but in a coordinated way to prevent bankers from moving from one place to another to escape regulation.
"Lenin might have been able to put socialism in one country, but tough bank regulation in one country ain't going to happen because we will lose people," said Frank, who heads the House Financial Services Committee, a key spot for any American decisions.
The measures have been criticized by banks and hedge funds, fearful that more and more regulation could have the unintended effect of halting what most agree is a nascent economic recovery around the globe.
Government regulators, finance ministers and central bankers from the United States and Europe laid out their financial reform plans during a two-hour meeting Saturday with bank executives at the World Economic Forum. The event was not on the forum's official agenda, but quickly became the most significant development of the day.
Frank, who emerged from the closed-door meeting as its unofficial spokesman, rejected the notion that the Obama administration could sink the economy again with too many new controls on the banking industry. "That's nonsense," Frank told reporters. "What we're trying globally to recover from is a total lack of regulation."
Few details of what was discussed were made public, but Frank said there would be a bank tax imposed by individual countries. "The financial industry understands tough regulation is coming and it can be done thoughtfully," he said.
The head of Britain's Financial Services Authority said the banks didn't ask for anything at the talks. "It was not a negotiation or a debate," Adair Turner said. "It was a discussion of a full range of issues organized in breakout groups and discussions."
On the U.S. government side, besides Frank, those at the meeting included Lawrence Summers, President Barack Obama's top economic adviser, British treasury chief Alistair Darling and French Finance Minister Christine Lagarde.
Other bankers attending the private talks included Bank of America Corp. CEO Brian Moynihan, JPMorgan Chase & Co. Chairman Jacob Frenkel and Jean-Claude Trichet, president of the European Central Bank, which oversees the 16-nation euro zone.
Green fund: International Monetary Fund managing director Dominique Strauss-Kahn said the IMF plans to create a $100 billion "green" fund to pay for low-carbon growth. The move recognizes that developing countries don't have the resources to fund efforts to tackle climate change, while developed countries are saddled with debt, Strauss-Kahn said at a panel discussion at the World Economic Forum.