Sir Howard Davies on leverage, the crisis and the FSA

Just found a great YouTube channel called the Banking Conversation and run by my mate Emmanuel Daniel, editor-in-chief of the Asian Banker.

Interviews include Stephen Green (Chairman of HSBC), Craig Donahue (CEO of CME Group), Dick Kovacevich (Chairman of Wells Fargo),  Chuck Prince (former CEO of Citigroup), Fan Gang (Director of the Institute of Economic Research of China), and more.

One that caught my eye is a half-hour interview with Sir Howard Davies, former Chairman of the UK's financial authority and now a Director of the London School of Economics.

The interview is in three parts.

Part One

Part Two

Part Three

He also wrote an opinion piece for the Japan Times that supports the views expressed in the interview and refers to analysis that shows that if "you had placed a long-term bet on financial
equities in 1900, along with a short bet on general equities — in
effect a gamble on whether the U.K. financial sector would outperform
the market. For the first 85 years, this would have been a very
uninteresting gamble, generating an average return of only around 2
percent a year.  But the period from 1986 to 2006 was radically
different. During those two decades, your annual average return would
have been more than 16 percent."

Fascinating stuff …