The annual meeting of the World Economic Forum in Davos saw Goldman Sachs President, Gary Cohn issuing a warning against the initiative to implement fresh regulations on banks. Such a step, said he, could lead to the next crisis by pushing risky activities towards hedge funds and other lightly supervised entities.

The Goldman Sachs executive also criticized the regulators for their focus on traditional institutions.

Appealing the regulators for looking at the effects of the new regulations on the entire financial system, Mr. Cohn said that over the next few years, the unregulated sector will move ahead at an exponential rate.

Noting that risk was risk, Mr. Cohn said that his concern was that the risk would shift from the regulated, more transparent banking sector to a less regulated, more opaque field.

“What I most worry about is that in the next cycle, as the regulatory pendulum swings, we are going to have to use taxpayer money to bail out unregulated businesses that, unlike the banks in the last crisis, may not be able to repay them”, said Mr. Cohn.

However, a hedge fund manager dismissed Mr. Cohn’s remarks as “self-interested”, saying such arguments were being put forward by banks like Goldman Sachs as they are concerned about losing lucrative business to new entrants.