Now It's London's Turn to Fret

Not too ago, U.S. business leaders were warning that London was poised to overtake New York as the world's financial capital because of its superior (read: laxer) regulatory approach, more modern infrastructure, lower taxes, etc., etc., etc.

Now, apparently, the hand wringing is on the other foot.

Boris Johnson, the mayor of London, said today that London is in imminent danger of being supplanted as a global financial center by any number of other cities with ambitious politicians and active publicists, from Dublin to Dubai.

"It is clear there are challenges that must be overcome if London is to retain its global status, particularly during the current economic downturn," Johnson said after distributing a report from a blue-ribbon panel of British business leaders.

"I will not stop until I lobby whoever it takes to remove the obstacles that are putting London's global reputation at risk from the new kids on the block chomping at our heels," he said, gleefully mixing metaphors.

The report cites the familiar litany of handcart-to-hell problems raised in such exercises, including burdensome taxes, declining schools, and inadequate transportation.

But there's also a surprise -- a call for "more intense" supervision by the Financial Services Authority, Britain's consolidated financial-industry regulatory body.

"Our recommendations start with the industry supporting the authorities to rebuild London's reputation for leading global financial regulation and to restore trust in doing business in London," said the blue-ribbon committee's chairman, Bob Wigley, who is also Merrill Lynch's chairman for Europe, the Middle East and Africa.

Coming on the day after Bernard Madoff acknowledged that he was able to steal $50 billion from his clients under the nose of the U.S. Securities and Exchange Commission, calling for more regulation sounds like a smart bit of marketing for any aspiring financial capital.

by Mark Stein