London Backs Regulatory Reforms, But Warns Not To Do More Harm Than Good

New York City

American regulators must put into place "better, not simply more" financial services rules and regulators, while making sure reform efforts sustain, rather than kill the capitalist goose laying all of the economy's golden eggs, business leaders from the London market here warned.

Efforts in Congress and the White House to revamp the way financial services are overseen "must go beyond optimistic slogans and brave words," said Lord Peter Levene, chair of Lloyd's of London.

"It is imperative that we don't avoid the difficult discussions and painful changes required to make sure the economic crimes committed that nearly ruined us all are never repeated," he added in a speech last week during the annual Lloyd's New York City Dinner.

"No one in this room is a fan of more regulation," Lord Levene said. "But we are all supporters of better regulation."

He suggested that "to end the era of mistrust, the financial services market and its products must be far more transparent."

However, while revamping the regulatory system, government officials from both sides of the Atlantic must be careful not to do more harm than good, warned Prince Andrew, the Duke of York, who serves as the United Kingdom's special representative for international trade and investment, in his own speech at the dinner.

"We must assure that future steps do not kill the very capital markets that reforms are meant to save," he said.

Lord Levene also cautioned against any instinct to resurrect protectionist measures for short-term gain that would do long-term damage. "Globalization might have exacerbated the current financial problem," he conceded, "but turning to nationalism would be far worse."

Lord Levene did not address any specific reform proposals, although in the past Lloyd's–which writes over $12 billion of business in the United States, comprising some 40 percent of its global volume–has been an outspoken supporter of an optional federal charter, which would free the syndicated marketplace from having to deal with every state jurisdiction.

However, he did emphasize that the property and casualty insurance industry in general, and Lloyd's in particular, remains financially sound despite the crisis in the world economy.

"It is no accident that Lloyd's came through the financial crisis relatively unscathed," according to Lord Levene, who went on to boast that his market was "not lured into the more exotic products that proved to be the downfall for many of our competitors."

Indeed, he added, "we ignored critics who complained we were too conservative, whereas now conservatism in investment strategy is a badge of honor."

(During the dinner, the National Underwriter learned that LoriAnn Lowery will be leaving her post this summer as president of Lloyd's North America and that a search is on for her replacement.)

'SULLY' HONORED

Meanwhile, Lloyd's presented its Gold Medal for Saving Life to Captain Chesley "Sully" Sullenberger III, who on Jan. 15 landed U.S. Airways Flight 1549 in the Hudson River after its engines were damaged by birds and stalled just after takeoff.

Lord Levene introduced the guest of honor with words of praise for Capt. Sullenberger's "risk management skills, selflessness, sound judgment and bravery" in landing the plane safely and saving all 155 on board.

However, he added a sobering observation. "We are grateful for this 'miracle on the Hudson,'" he said, "while mindful that had the plane come down 400 yards to the left or to the right, we could have been facing another 9/11-type catastrophe."

Capt. Sullenberger–after being presented with his medal by Prince Andrew, a fellow pilot who flew in the Falklands War–said he would "gratefully accept this deep honor on behalf of my crew, my passengers and all the first-responders who performed so admirably and courageously during the evacuation that day."