Margareta Pagano: Obama's dreams of the future deserve support

Volcker's ideas just need a little more beef

Everyone is running around accusing President Obama of acting with outrageous political populism for dropping his banking Big Bang just days after the loss in Massachussets.

But it seems to me that if he had wanted to be really smart, he would have launched his bombshell before the vote, thus showing Main Street how serious he is about toughing it out with the Wall Street aristocracy, as well as getting a chance to keep that Kennedy hot seat. Still, he's certainly not so stupid as to take on Wall Street without a little planning for such a seismic shift. In fact, one banker I spoke to just after Thursday's $30bn speech (that's how much the market dropped on hearing the news) was to ask: "What took the guy so long?"

Whatever drove the timing of Obama's latest move, there's no question that the Volcker Rule (after the "big, tall guy" Paul Volcker, who – following years in the wilderness – is now Obama's top economics guru and architect of this proposal) will, if turned into legislation, change the way banks do business for generations. Nor should the break-up plans come as a surprise. For anybody who has been listening, the 82-year-old ex-Federal Reserve chairman has been warning for at least a year that there will be some sort of separation between commercial and investment banking.

As always, the devil is in the detail and it's almost impossible to tell what will be put to Congress later in the year. It's inevitable that some of Volcker's ideas will be changed; toughened up or watered down, and, hopefully, improved. How effective the rules will be depends, too, on the extent to which the big banks get involved. If they don't want to be blown to oblivion, they must pull their heads out of the sand and accept they must change at least some of their behaviour.

There are still lots of holes in the proposals. Banning commercial banks from proprietary trading is a positive move, but it's not yet clear which activities will be excluded. And, is it right that hedge funds and private equity should also be forbidded? Neither was directly responsible for the crash. That's where Obama and Volcker need to put flesh on the bones, explaining why they think this is a question of fairness rather than of systemic risk.

If politics detonated the bombshell, then it's worth looking at the politics post-explosion. The President knows he needs backing from the international community to succeed. This can only be achieved through the G20 and the Financial Stability Board; fast emerging as a "global regulator". He can expect backing from China and the Far East, but it's the UK and Europe which may prove the trickiest.

Obama's plans have put Gordon Brown and Alistair Darling in the most delicious pickle as both have persistently dismissed, with contempt, all debate about separation. Assuming the Tories win the next election, Obama will be backed by chancellor George Osborne, who has called for a similar break up. Ironically, the wild card will be persuading EU countries where universal banking works well – such as Germany and France – that stopping the "too big to fail" policy of the past could prevent future crises.

As Thomas Jefferson said: "I like the dreams of the future better than the history of the past", a view which Obama is now trying to put into action. He should be supported.

Cherchez la femme British boards should heed Sarkozy's call

Nicolas Sarkozy is getting bolder by the day. First, the French president promised his wife, Carla Bruni, that he would have an equal balance of sexes in his Cabinet, and now he's pledged that big firms in France must give 40 per cent of their boardroom seats to women. A new Bill, sponsored by Sarkozy's UMP party, says companies will have three years to fill 20 per cent of their directorships with women, then another three years to reach 40 per cent. It shouldn't be hard, as there are many] successful French women – such as Areva's talented chief executive, Anne Lauvergeon. A similar rule was introduced in Norway several years ago and, while they haven't yet reached the 40 per cent mark, it has been voted a great success by both sexes. With British boards only 12 per cent female, maybe it's time for a little European-style discrimination over here. Shift over, boys.

Bankers should take the high ground in Davos and prepare for a rethink

It's for the parties that people make the pilgrimage to Davos; that's where the business chiefs get to sweet-talk royalty, bankers plot back-room deals with politicians and Bill and Melinda Gates appear on earth to show they really do exist. But while much is made of Davos being a glitzy champagne-fest, the organisers claim it was also home to some of the more notable peace deals of the last century. In 1994 Shimon Peres and Yasser Arafat thrashed out bits of the Gaza-Jericho agreement in Davos, while two years earlier a meeting between F W de Klerk and Nelson Mandela was a vital step along South Africa's path away from apartheid.

So what can we expect from this week's get-together after a fraught year of financial crises? The founder of the World Economic Forum, Klaus Schwab, has chosen an ambitious title: Improve the state of the World: Rethink, Redesign, Rebuild.

Schwab couldn't have dreamt up a more appropriate challenge for a meeting so soon after President Obama's attack on Wall Street. With more than 12 central bankers in attendance, there will be ample opportunity to chat about how they should rethink and redesign themselves. As Barclays chairman, Marcus Agius, said in a speech only hours before Obama launched his missile, bankers shouldn't complain about the political brickbats being thrown at them, but face up to the challenges. It's good to hear such a senior banker being so open, especially as he's from one of the banks which faces break-up should Obama's proposals bear fruit. Hopefully he'll continue the theme at Davos.

One of Schwab's great fears is that our financial upheavals will lead to social discord. Now he must persuade the bankers that unless they face up to the rebuild, they could be held partly responsible for any unrest. Suddenly, Davos doesn't seem quite so cosy.