Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-09-22-Speech-1-074"
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"en.20080922.19.1-074"2
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"Mr President, ladies and gentlemen, this report was originally aimed at hedge funds and private equity, but now covers the entire financial system, which has completely collapsed.
The present crisis is the hideous aftermath of a credit mania, specifically of the excessive expansion of debt. The Federal Reserve kept interest rates too low for too long and thereby essentially provided a credit subsidy.
We have drawn up the report on the basis of the current situation and together with our fellow Members from the Group of the Alliance of Liberals and Democrats for Europe, we have reached an agreement with Mr Rasmussen, which encompasses the entire financial system. We are grateful that this has gone through virtually unanimously in the Committee on Economic Affairs.
We can no longer rely on US standards and the setting of standards in the international financial system. We must create our own new, European options and we have proposed adopting a whole range of items and ending discussions on them.
As a start we must include all the financial institutions working with leverage in the particular risk assessment. We then say that in the global financial system, risk-adjusted capital requirement must have the same status for all players. We should also be stipulating requirements for promoters of packages and syndicating packages, whereby they retain a chunk beyond these packages. The rating agencies – Mr Rasmussen and Mr Lehne have already pointed this out – must close the gaps in information and disclose conflicts of interest.
We should consider whether or not we get the rating agencies to assume liability for their rating along the lines of the financial auditors. We must then also consider whether or not derivatives should be traded compulsorily on the Stock Exchange – possibly with the exception of interest rate swaps. We are also asking that the banks’ governing boards ensure that bankers’ bonuses take account not only of good performances, but also of any losses that may eventually occur. This therefore means that incentives for bankers apply in the good and the bad times and not just in the good times.
Greed was and is a bad advisor on financial strategies. In recent years we in the ECB have had a reliable partner, who all in all has reacted
in a rather more reasonable and balanced manner than the Federal Reserve. This we can say with hindsight. In the euro area we are also in urgent need of European banking supervision for the euro area because we cannot carry on living with national supervision alone. This means that all in all we are assuming that institutions, or even voluntary associations, are being set up in Europe so that the subjects we are addressing can be better understood in order to prevent the next crisis of this magnitude."@en1
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