“Values have shrunken to fantastic levels; government of all kinds is faced by serious curtailment of income; the withered leaves of industrial enterprise lie on every side; the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence and an equally great number toil with little return,” said Dr. Josef Ackermann, quoting US President Franklin D. Roosevelt’s inaugural speech in 1933, at the Center on Capitalism and Society at Columbia University in New York last Friday.

In opening his speech, “A new era: How the crisis will reshape politics, societies and finance”, given at the 6th Annual Conference of the Center: Emerging from the Financial Crisis, the Chairman of the Management Board said Roosevelt’s words, although spoken more than 70 years ago, “capture perfectly the essence of today's downturn.”

Dr. Josef Ackermann stressed that immediate crisis management should not overshadow the longer-term perspective. “The West is undergoing a once-in-a-century shock, not just in the economy, but in society at large,” he said.

According to Dr. Josef Ackermann, there are three aspects where transformative powers at work:

The fall-out from the crisis will have a transformative impact on the role of the state in the economy,

The financial crisis will accelerate the rebalancing of economic and political power in the world, and

It is the moment of truth for the international community as regards the future of globalization.

Radical change for the financial sector

Banks have committed serious mistakes in the run-up to the crisis, said Dr. Josef Ackermann, adding that fairness requires acknowledgement of the shortcomings of governments and supervisory systems.

“Work to rectify these deficiencies is underway. Major regulatory changes will emerge from the G20 process,” said Ackermann, adding that banks are making substantial changes to their business models, risk managements and the way they conduct their business: “The financial industry is used to change. In fact, the ability to innovate is the key to success in our industry. I have little doubt that the industry will be able to reinvent itself this time, too.”

Dr. Josef Ackermann also highlighted the importance of the role of academia, “where the luxury exists to build innovative concepts from scratch – unencumbered by corporate and institutional legacies, independent of electoral cycles and free from the tyranny of day-to-day crisis management that has pre-occupied key personnel in administrations and firms for many months now.”

In closing, Dr. Josef Ackermann said: “Eternal fame and glory await the one who will provide the silver bullet to the two trillion dollar question. Now, that should be incentive enough to prove to the world that the times may be dismal, but our profession is not!"