Google CEO Schmidt slams bankers ahead of Davos

Eric Schmidt, the CEO of Google, has come down firmly in favour of regulating the banking industry, two weeks before he is to chair the Davos summit. Which means he could get a frosty reception from two of his co-chairs, the CEOs of Deutsche Bank and Standard Chartered.

The theme of this year's five-day gathering of the world’s most influential business and political leaders is 'Improve the State of the World: Rethink, Redesign, Rebuild'. The French president, Nicolas Sarkozy will give the opening speech on January 27.

At the weekend, Schmidt told the Daily Telegraph who he felt was to blame for the financial crisis in no uncertain terms: the American financial sector, with the help of a US government bent on deregulation – and he has no sympathy for bankers.

"The number of people who were hurt by the activities of the financial industry is so large, it is very hard to have a lot of sympathy with that industry given the high-flying nature of its behaviour," said Schmidt. "Remember, many of these institutions privatised the gains and socialised the losses."

The Google boss, a vocal supporter of Barack Obama, leaves us in no doubt that any "rethink" or "rebuild" of the financial system must involve regulation. He argues that something had to be done to save the financial system when credit markets froze in 2008. The banks were too big to fail then: therefore they should be regulated now so that they cannot in future get into the position where they may collapse. "You cannot have a situation where you only win and do not lose in capitalism. At Google, if I lost $10bn in one day I would like to lose my jacket," he argues.

Schmidt's comments came as the Guardian reported that Britain's 50 per cent tax on bankers' bonuses had been completely ignored by the City, with the top investment banks planning to award a combined £40bn in bonuses.

But should the Google CEO wish to make his point in person, he will not have far to go. Among his fellow co-chairs at Davos is Josef Ackermann, the CEO of Deutsche Bank, which is planning to ensure none of its employees lose their jackets by spreading the cost of the UK's bonus supertax between its global staff in an extraordinary display of workers' solidarity from the consummate capitalists.

Ackermann is particularly unamused by critics of his industry, having told the Financial Times last month: "The bashing of banks and bankers in my view is not very helpful from a real economy and prosperity and progress point of view." As for his views on regulation: "We don’t need more regulation, we need better regulation."

Also unlikely to take kindly to Schmidt's comments is another co-chair, Peter Sands, CEO of Standard Chartered, a bank that specialises in emerging markets. He is on record as having warned the UK government that heavier regulation of the financial services industry will be passed on to customers in the form of increased prices.

If Schmidt finds himself cold-shouldered for his populist view of the bankers, he might at least find solace with David Cameron, who is also planning to attend Davos.

Like the Conservative leader, Schmidt is worried about Britain's ballooning budget deficit. Unlike the US, which can spend to its heart's content thanks to the dollar's role as the world's reserve currency, Schmidt says: "In Britain, you don't have the ability to run enormous deficits for the next 10 years so whatever government comes in, they have a much more severe spending problem, they just can't [run a deficit] at the level that America can." ·