Insisting that the banking situation in Europe is less dire, EU officials say they are advocating tougher regulations, but not debt relief.
“If there is a need for stricter financial regulations worldwide and in Europe in particular, a rescue plan like the one in the United States is not necessary at this stage,” said last Wednesday (24 September) EU officials to MEPs. Recent events in the financial sector are heavily affecting the economy, as they are “on a scale that exceeds anything we have seen in our lifetime”, admits Joaquin Almunia, European Commissioner for Economic Affairs of the EU.
However, referring to the recent decision by the United States to buy 700 billion dollars (476 billion euros) in the bad debts of banks and other financial institutions, he underlined that “the situation we are facing in Europe is less serious and the Member States [of the European Union] do not consider at this stage that a plan like that of the United States is necessary”.
“We are talking about a plan from the United States, adapted to the situation in the United States, the country from which, it must be remembered, the crisis began and where the financial sector was most seriously affected. “, points out the European commissioner.
Also speaking in Parliament, Jean-Pierre Jouyet of France, Secretary of State for European Affairs, whose country currently holds the six-month rotating presidency of the EU, aligned himself with the same position, saying that the European financial system is “still stable and does not need this kind of measure”.
They both insisted, however, that this does not mean that more regulation is not needed, as bank opacity is one of the factors behind a “dramatic drop in confidence”. ” on the stairs.
“This laissez-faire will not benefit anyone. It is too late for that. We now need to look at the extent of the risks, the power of regulators and the type of intervention,” Jouyet said.
For his part, Almunia underlined that following the latest events in the financial markets, “the current model of regulation and supervision must be overhauled”. BRUSSELS MUST TAKE ACTION
The debate in Parliament took place one day in barely after MEPs asked the European Commission to present legislative proposals aimed at improving the regulation of the financial sector, particularly targeting hedge funds and private equity firms.
Charlie McCreevy, EU Commissioner responsible for the European Union’s Internal Market, rejected the proposals last Monday, saying no additional regulation is needed for the funds.
But last Wednesday, Almunia said EU leaders will present new rules for the banking sector next month, in particular on how many banks are allowed to hold reserves, and how regulators must act when there is a risk of bankruptcy for a bank.
It will discuss a proposed law on the supervision of credit rating agencies, which have been criticized during the crisis for not having alerted investors to certain risks and for having listed risky debt in the category of investments sure.
Alumnia also said it would tackle the issue of executive compensation: “We need to think about the compensation system for executives [and] CEOs,” he said, adding that the subject will be examined at the next meeting of EU finance ministers.
Some MEPs remained skeptical and said that so far the actions taken by Brussels have not been convincing. “It’s been more than a year since the financial crisis began [and] there is still no regulation,” says Pervenche Beresle, French Socialist MP, giving credit rating agencies as an example.
“A problem arises when governments don’t trust each other to tighten financial regulation and when the Commission falls short,” she told reporters later.
For his part, Jouyet stressed that the Commission must be able to act quickly. “We need to restore trust and reassure people. »
“We must have things to propose for the session [EU summit] next October 15,” he added.