Banks' sleight of hand could lead to regulatory slippage

By focusing attention on the shadow banking system, bank chiefs might be deploying a diversionary tactic to block regulatory reforms.

Emboldened by strong revenues and profits, and maybe confident that time has dimmed outraged memories, banks are becoming more confrontational. The risk is that their influence on policymaking leads to regulatory slippage before the new rules are fully in place.

Late last year, Lloyds Banking Group said in its evidence to the UK’s Independent Commission on Banking that new regulation “may make matters worse rather than better”. Barclays even asserted that banks should...

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