Friday, October 21, 2016

Bank Fines Causing Slow Global Growth: Fines Reduced Global Lending Capacity To Real Economy By Over $5 Trillion

From The Wall Street Journal, "Bank Legal Costs Cited as Drag on Economic Growth: Fines on banks translate into $5 trillion of ‘reduced lending capacity,’ bank says" by Katy Burne and Aruna Viswanatha:
A heightened emphasis by banking regulators and law-enforcement officials on financial misconduct may be constraining global growth, some officials warn.

Legal expenses are among the burdens weighing on banks, policy makers say. “The roughly $275 billion in legal costs for global banks since 2008 translates into more than $5 trillion of reduced lending capacity to the real economy,” Minouche Shafik, a deputy governor of the Bank of England, told a New York conference of regulators and bankers Thursday.

Other policy makers have expressed concern that strict crackdowns on banks’ lapses in carrying out anti-money-laundering regulations have led banks to nearly cut off several emerging markets from the global financial system, damping their economies. The International Monetary Fund, in particular, has sounded that alarm repeatedly this year and held a conference highlighting the issue at its annual meeting in early October.