A representative for a foreign bankers group forcefully prevented the press -- and physically restrained a Huffington Post reporter -- from attempting to question a U.S. Treasury Department official who had just addressed a roomful of bankers on the administration's financial reform efforts.
The effect was to shield the public official, a key lieutenant to Treasury Secretary Timothy Geithner, from answering reporters' queries.
The official, Marisa Lago, an assistant secretary for international markets and development, told the assorted bankers from foreign institutions that she didn't expect other countries to follow the Obama administration's lead in its attempt to prevent banks from trading with their own funds or from owning hedge funds and private equity firms, speculative activities that comprise the so-called "Volcker Rules."
There's "not an expectation" that the initiatives will be "rolled out globally," Lago said. The proposed ban on these activities, named after its original proponent, former Federal Reserve Chairman Paul Volcker, is vigorously opposed by domestic banks.
The prohibition on proprietary trades and other speculative activity is designed to bar banks from using existing taxpayer support, in the form of access to cheap funds from the Fed and federal deposit insurance, to engage in actions that aren't central to the business of banking.
The rules represent a "desire to protect banks" and restrict their ability to take risk, Lago said.
Among those in attendance were bankers from Arab Bank Plc, Barclays Capital Inc., BNP Paribas, the Bank of China, Deutsche Bank AG, and Societe Generale SA. Lago spoke at the luxury hotel Waldorf Astoria, New York.
If the "Volcker Rules" were to emerge from the final financial reform legislation that the House and Senate will soon take up, they will not apply to foreign banks that conduct these activities abroad.
Lago also told the bankers that although challenges remain regarding the resolution authority contained in the legislation, that shouldn't dissuade Congress from passing it.
Federal financial regulators and the Obama administration argue that the authority will enable them to dismantle ailing large, interconnected financial firms before their collapse threatens the entire financial system. It's a key part of the administration's attempt to forever end the perception that large financial firms are too big or too interconnected to fail.
Lago said there are "challenges" with respect to whether foreign regulators will also implement such a regime, and whether the U.S. and its global counterparts will coordinate their activities when such a firm threatens global financial stability.
Critics of the legislation say that these challenges are permanent, and will prevent the new authority from ever being used if a systemically-important firm, like a Goldman Sachs or JPMorgan Chase, nears collapse. Instead, these firms would be bailed out by taxpayers and regulators in one way or another.
However, those challenges shouldn't be used an an "excuse" to not implement the new, beefed-up authority, said Lago.
After she delivered her remarks and answered assorted questions from bankers and their lawyers, reporters attempted to ask a few questions, too.
But William Goodwin, the communications director for the Institute of International Bankers, told reporters that Lago had to rush off to another meeting.
As two reporters trailed Lago as she walked towards the hotel's Park Avenue doors, this reporter attempted to follow her out.
But this reporter was physically restrained by Goodwin, who forcefully grabbed his arm, pulled him back and prevented him from exiting the hotel or asking a question of Lago, a public official.
Lago was then whisked away by a taxi.
Goodwin didn't respond to multiple requests for comment.
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