Banks finally play nice as Davos comes to an end

The bankers and politicians are clearing out of Davos but what, if anything, have they achieved? Not much – except a consensus that bashing each other is unconstructive and perhaps reform is a good idea after all.  Stephen Green, chairman of HSBC, noted that while the banking system had been pulled back from the brink of collapse, "there has been a huge breakdown in trust".

Despite reports that the Goldman Sachs CEO Lloyd Blankfein is about to take a $100m bonus – which will doubtless infuriate President Obama - wire service reports suggest policy makers and bankers are ready to call a truce, if only to start to restore their dismal reputation of their professions. "On many aspects, we found common ground," Deutsche Bank CEO Josef Ackermann said. "There was better dialogue between business leaders, political and regulatory leaders than ever before."

High on the agenda was the concept of "too big to fail" and the prospect of wide-ranging regulatory and tax reform on the banks. "There has to be a lot of discussion to make sure that we do the things we need to do in terms of reform," said Brian Moynihan, the CEO of Bank of America, the largest US bank.

But what - beyond pleasing rhetoric - does that mean?

According to Bloomberg, global banks have resigned themselves to new regulations despite their belief this will restrict growth. Banks have little room for manoeuvre, says Barney Frank, chairman of the House Financial Services Committee. "The big banks, if they think they're in a position to stop the regulation, they're deluding themselves. They have no political support."

"There is real political pressure to do something," one senior western regulator told the FT. "The banks need to recognise that."

In the current anti-bank climate, bankers seem close to accepting their position. "You want to keep regulation to a minimum," said George Soros, "because it is worse than markets. But you can't do without it."

Not everyone is ready to accept this fate so meekly. "We need it to remain an orderly process in which regulators take the lead role and organise the dialogue with the banking industry," says Frederic Oudea, chairman and chief executive of Societe Generale. "Otherwise there will be confusion, uncertainty and additional pressure on the financial system."

Politicians, too, recognise they are vulnerable to the fallout from the financial crisis and recession. With his tanking approval ratings, President Obama has been stressing job creation in recent speeches for good reason: the electorate remain furious that the banks were saved but little has been done to relieve the struggle of millions of indebted individuals and families. Obama sent his chief economic adviser Lawrence Summers to Davos where he described the US situation as "a statistical recovery and a human recession". ·