On what is symbolically, if not effectively, Mario Draghi’s last day at the helm of the world’s biggest hedge fund, with some $5.2 trillion in assets, a trio of US commercial bankers took turns to troll the Europe and its banks in general, and the ECB and Mario Draghi in particular, warning that the ECB’s policy is idiotic, destructive and woe to the US if the Fed ever decides to launch it here.
The bankers said that negative interest rates, such as those which the ECB unleashed half a decade ago, would crippled economic growth in the U.S. even as President Trump has been urging Fed Chair Powell to cut rates to less than zero.
According to Bloomberg, bankers from Morgan Stanley and, unironically, Deutsche Bank took turns on Thursday to bash negative rates, saying they have failed to stimulate growth around the world, speaking just minutes before Trump tweeted his appreciation for Draghi’s years of robbing from savers, saying that the Federal Reserve would be “derelict in its duties” if it doesn’t cut rates further.
“The negative-rate experiment, if you will, around the world has effectively not worked,” Morgan Stanley CFO Jon Pruzan said at a Financial Times conference in New York. “So we’re hoping we’re not going to mimic a policy that hasn’t worked.“
Other, such as Citizens Financial CEO Bruce Van Saun, counted their lucky stars they don’t have to operate under Europe’s ludicrious monetary regime, saying that while his bank is preparing for persistently low rates in the US, he doesn’t believe the Fed is crazy enough to cut rates to less than zero (as for low rates which cripple NIM, banks will have no choice but to build out other sources of fee income, such as advisory and wealth-management services).
But the most amusing was the comment from the head of Deutsche Bank’s US operations, Christina Riley, who is working for a bank that has been most directly impacted by Mario Draghi’s disastrous legacy.
“Speaking from the eye of the storm in Europe, I can only echo them,” Riley said of her fellow panelists. “Please don’t do this, please don’t do it, it defies all logic.”
And with that, we look to Mario Draghi being awarded the Nobel Prize in economics.