Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-10-08-Speech-3-087"
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"en.20081008.15.3-087"2
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"Mr President, I am going to use this moment just to say a few words on issues which seem to frame the public debate on regulation and supervision.
Firstly, free markets are not synonymous with no regulations. A lax monetary policy can lead to higher inflation and eventually to recession but cannot by itself cause the meltdown of a financial system. The features of the financial system that have brought the threat of collapse are structural traits of the new financial system.
The root cause of this crisis is an inadequately regulated financial system. Mortgages are not toxic per se; badly constructed securities based on them are toxic. The packaging of financial products can bring a lot of opacity to markets. Compensation schemes that make behaviour irresponsible: that is toxic. Misleading models are toxic; extreme leveraging is bad. Not to address these problems would be terribly wrong.
Not all financial innovation is benign. It is baffling therefore to hear that fresh regulation is bad because it would stifle financial innovation.
Building up proper regulation and supervision is not about bringing in socialism. It is about what kind of market economies we want to live in. That may lead to the recreation of elements of state capitalism, I agree, and that is for discussion.
Relying on industry-led initiatives is quite insufficient, for such initiatives frequently serve vested interests.
Why is it that we fail to learn from previous crises? Clearly, vested interests can have a long arm and try to influence regulations and supervision, including the behaviour of people like us.
Do moral values matter? Yes, I believe they do matter. The mess that we are in today is also because some believed that moral values do not matter in business. Regulators and supervisors should understand that there are systemic risks. They should always be alert to financial stability.
Strains and crises cannot be entirely avoided, but we can limit the damage they cause. We need comprehensive answers to crises and genuine coordination among the EU, US and other major financial centres, particularly during bad times."@en1
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