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MEPs debate financial crisis and upcoming European Council

Posted by benjamin-nicolau en octubre 9, 2008

MEPs debate financial crisis and upcoming European Council

 

The EU should act in a united fashion to tackle the financial market crisis, and Member States should avoid unilateral steps which cause problems for their neighbours, according to most of the MEPs taking part in the debate on next week’s EU summit and the financial turmoil. Most groups welcomed the Commission’s plans for a high-level group to consider market supervision policies, though some complained that not enough had been done in the past.

Council

French European Affairs Minister Jean-Pierre JOUYET speaking for the Council on the financial crisis said that “European co-ordination was a practical reality.”  Banks, regulators and the European Commission were all working together.  “The EU is not a federal state comparable to the US”, he said. Minister Jouyet welcomed the co-ordinated announcement of a half point cut by Central Banks across the world and stressed the importance of stabilising the inter-bank market.  Specifically, Mr Jouyet welcomed the measures announced by Prime Minister Gordon Brown in the UK.  He called on the Commission to show some “flexibility” as regards EU state-aid and competition rules. Finally, Mr Jouyet called on the International Monetary Fund (IMF) to act as a real “financial policeman” as, he said,  was the intention when it was created.

On the energy and climate package, Minister Jouyet said that he hoped to maintain the ambitious goals set out in the Commission proposals and that a first-reading agreement could be reached.

On the Lisbon Treaty, the Minister recalled that the Irish government should bring forward a “roadmap” that all Member States can sign up to for the December European Council.  “We need the treaty more than ever”, he said.  

Commission

Europe has the rules it needs to tackle the financial market crisis in a European way, but this will be a severe test of its ability to co-ordinate effectively and act quickly, said Commission President José Manuel BARROSO.

Public intervention mostly takes place at national level because that’s where the money and expertise are, but Member States must act on common principles, so as to take account of the cross-border effects of rescue operations, he continued, noting that in Europe, “two thirds of banking assets already have cross-border aspects”.

Commission proposals on capital requirements, credit rating agencies and executive pay restraint (if better heeded) would help to build confidence, but Member States must show their resolution to act quickly, he said.

Meanwhile, the Commission is setting up a high-level group, chaired by former IMF Director-General Jacques de Larosière, to reflect on how Europe’s financial market supervisory architecture can be made to fit its needs. This group will include European Commissioners Neelie Kroes (competition), Joaquin Almunia (economic and monetary affairs and Charlie McCreevy (internal market and services).

Some may say that a downturn is no time to worry about climate change, but progress on remedial measures is in fact central to our future prosperity, said the President.

On EU institutional reform, Mr Barroso avoided prejudging the way forward, but stressed the difficulty of managing crises when the Presidency rotates every six months. “These are unprecedented times, and we need to rise to the occasion”, he concluded.

Political group speakers

The financial crisis is very worrying for the economy, jobs, and for millions of people who worked hard to save and see that the fruits of their efforts are vulnerable, said Joseph DAUL (EPP-ED, FR). Europe must manage the crisis and learn lessons, pooling its efforts to minimise the impact on its economies and firms – particularly small and medium-sized enterprises, which need support measures, he continued.

Financial markets are not working properly, credit rating agencies are not able to publish figures showing true levels of solvency, and it is “unacceptable” that the people who brought banks to their knees are not held to account, he stressed.

Mr Daul urged those Member States that have not yet ratified the draft Lisbon Treaty to do so as soon as possible, and hoped that it could be finally adopted in December. The Treaty is needed to enable the EU to take tough decisions, be they about the financial crisis or its own institutions, he said. 

On climate change, Mr Daul warned against alarming industrialists, who have enough to worry about already. “We need time to save the planet for our children and grandchildren”, he concluded.

“We need Lisbon more than ever” to help us to deal with crises, and we have to win over the Irish people to get it, said Martin SCHULZ (PES, DE).

Mr Schulz thought Commissioner Almunia an excellent choice for the high-level steering group announced by Mr Barroso. He was less happy with that of Mr McCreevy, whom he called an “apologist for untrammelled market capitalism”. This would the “arsonist taking over the fire brigade”, he said, adding that Ms Kroes “wants to do away with public savings banks”.

 “We have been hearing for years that the market will sort it out”, but “the neo-liberal mainstream has just collapsed in a heap”, he continued, stressing the need to think hard about appropriate rules for the new architecture, and suggesting that some forms of speculation should be prohibited by law.

Graham Watson (ALDE, UK) for the ALDE group said “At next week’s European Council you must move forward discussions on the Lisbon Treaty. We need a collective response to the financial crisis. We cannot sustain a situation in which Member States surprise one another with unilateral decisions with multilateral implications. Europe needs coordinated and consistent policies to stem the flow of financial losses, to establish transparency and good practice and to prevent future woes.”

 

There are some who think they can now tap dance on the grave of capitalism, but solutions will not be found in closed markets and command economies. What we witness is not the failure of the market economy. Rather it is the excesses of unfettered, ineffectively regulated markets. Financial markets currently owe less to Adam Smith than to Cincinnati Kid. The greed of individual bankers, traders and short-sellers is certainly to blame, but so too is the failure of governments to ensure transparency and honesty in their dealings. They are not an overnight cure, but they will help to remedy the underlying sickness. It is right to raise deposit guarantee protection to a 50,000 euro minimum across the Union. Family savings will be secure and capital flight discouraged. We also look forward to hearing the Commission’s proposal to promote convergence of deposit guarantee schemes, just as we support rapid adoption of your ideas for improving capital adequacy. When you look at credit rating agencies, look at who pays their fees and at how they are supervised.

  

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