French President Nicolas Sarkozy clashed with the chief executive of US investment bank JP Morgan Chase at the Davos forum on Thursday, telling him bankers had done things which defied common sense.
JP Morgan boss Jamie Dimon had earlier in the day lashed out at persistent bank bashing nearly three years after the global credit crisis began, saying it was "unproductive and unfair".
But when he rose at a later session to ask Sarkozy a question about regulation of banks, the French president launched into a broadside blaming financiers for their behaviour, which he said had caused the crisis.
"The world has paid with tens of millions of unemployed, who were in no way to blame and who paid for everything," Sarkozy said to Dimon. "...it caused a lot of anger, Mr President, a lot of anger."
Dimon was not given an opportunity to respond to Sarkozy's remarks. Credited with being one of the few US bankers who steered his firm through the financial turmoil of 2007-08, he had earlier told a separate panel discussion not all banks made the same mistakes in the run-up to the crisis.
"Not all banks are the same and I just think that this constant refrain 'bankers, bankers, bankers' is just unproductive and unfair. People should just stop doing that," Dimon told a panel on "The Next Shock: Are We Better Prepared?"
MARKET OR MADHOUSE?
But Sarkozy was having none of it.
"The world was stupefied to see one of five biggest US banks collapse like a house of cards," he told a plenary session of the Davos Forum.
"We saw that for the last 10 years, major institutions in which we thought we could trust had done things which had nothing to do with simple common sense. That's what happened."
The United States government spent hundred of billions of dollars of public money to bail out financial institutions, after the dramatic failure of Lehman Brothers in 2008 through the controversial Troubled Asset Relief Program (TARP).
"There is a huge misconception. Not all banks needed that TARP. Not all banks would have failed," Dimon said at the earlier session. "A lot of banks were stabilising the problem -- JP Morgan bought Bear Stearns because the US asked us to."
Dimon closed the earlier session by saying his biggest current concern was that "bad policy" could make things worse as the banking industry was trying to recover.
He appealed to Sarkozy for flexibility in governments' approach to regulation, saying the rules should allow big banks to fail without bringing down the financial system but that it was important to get policies right.
Sarkozy said bankers were wrong to resist tough rules. "There is an ocean between flexibility and the scandal we saw," he said. "So if people present me as obsessed with regulation, it's because there is a need for regulation.
"I don't contest the principle of securitisation, but when one offshore country guaranteed 700 times its GDP, are we in the market economy or in a madhouse?"
Finally, the French president took aim at bank bonuses.
"Bonuses don't bother me, provided there are also ... draw-downs when there are losses. When things don't work, you can never find anyone responsible. Those who got bumper bonuses for seven years should have made losses in 2008 when things collapsed."