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Morgan Stanley’s Mack Proposes Single Global Bank Regulator

• Bloomberg
Morgan Stanley Chief Executive Officer John Mack, who struggled to return the bank to profitability amid the financial crisis, said a single regulator should oversee financial institutions worldwide.

“A better system would be one uber-regulator,” Mack said in an interview in New York for Bloomberg Television’s “Conversations with Judy Woodruff,” parts of which will air today. “We do need an overall systemic-risk management that everyone buys into. It’s not a U.S. systemic boundary -- it’s a global systemic risk manager.”

A global regulator would ensure that U.S. banks aren’t subject to tighter regulations than the rest of the world, Mack said. A push for regulation during the financial crisis has weakened as the administration of President Barack Obama pursues other tasks, he said.

Morgan Stanley and Goldman Sachs Group Inc. converted to bank holding companies one week after Lehman Brothers Holdings Inc., Merrill Lynch & Co. and American International Group Inc. collapsed or were rescued in September of last year. Less than a month later, Morgan Stanley took $10 billion from the U.S. government as part of the Troubled Asset Relief Program. It has since paid back the government.

“I think the crisis is over,” Mack said in yesterday’s interview. “What I worry about is that we lose momentum with some of the regulatory changes that we need to go through.”

No Job Growth

While the financial crisis has subsided, economic recovery and job growth may take longer to return, Mack said. Confidence among U.S. consumers unexpectedly fell in September as a rising unemployment rate weighed on households, the New York-based Conference Board said. U.S. unemployment climbed to 9.7 percent in August.

“We’re a ways off in creating jobs and I do think that this is going to be a very slow recovery,” Mack said. “In the developed countries, Western Europe, the United States, I don’t see a lot of growth.”

Mack said in an interview earlier this month that he considers his greatest accomplishment to be leading Morgan Stanley through last year’s crisis. While the firm survived, it has lost money since the third quarter of 2008 and reined in trading as Goldman Sachs earnings surged to a record.

Mack has sought to improve profit and repair divisions that appeared under former CEO Philip Purcell. His strategy of boosting trading risks backfired in 2007 when bad bets led to the firm’s first quarterly loss.

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