Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-09-22-Speech-1-087"
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"en.20080922.19.1-087"2
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"Madam President, at present the financial crisis is casting hedge funds and private equity in a frightening light – and other financial innovations such as structure investment vehicles, conduits and money market funds are being similarly affected. All of these have been conceived precisely for the purpose of sidestepping the capital adequacy and transparency requirements we impose on banks. There is much profit to be made from borrowing liquid assets short, investing in illiquid assets long and staking minimum own capital, but this is a dangerous activity. As we can see, both liquidity and solvency can soon vanish. That is the reason for the strict international banking rules. We are now seeing the collapse of the international non-banking system. Hedge funds and private equity are next. These have very little own capital; they are highly leveraged. Private equity involves enormous numbers of leveraged buyouts, LBOs, which have been carried out with virtually no own capital. This being the case, should we really be presenting feeble reform proposals such as these in this field at this historic juncture? I for one do not think so."@en1
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