Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-09-22-Speech-1-082"
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"en.20080922.19.1-082"2
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".
Mr President, Commissioner, ladies and gentlemen, if European banks are withstanding the current crisis relatively well, it is simply because banking supervision in Europe – while far from perfect – is at least serious. The ongoing work on the Capital Requirements Directive and on Solvency II affords an opportunity for introducing useful measures to improve financial security. It goes without saying that the job of a banker entails taking risks but those risks must be controlled. The important thing for bankers is to know at all times what security they have on a given risk. Certain unregulated financial operators lost sight of that simple principle, and in their case self-regulation will no longer suffice. Derivatives markets have grown increasingly murky, and traders have bought and sold at levels of risk that could not be contained by the management of those institutions that are now most exposed.
Recovery from this crisis depends on creating a supervisory system capable of inspiring and re-establishing confidence. There are currently whole swathes of the finance industry that lie beyond the reach of supervisory authorities. Who was supervising the mortgage brokers as they lent so generously to households that would never be capable of repaying? Who was supervising the investment banks that took the crisis up a notch by transforming the bad debt into financial products for sale all over the world? There is a regulatory void out there that is also inhabited by credit enhancers, ratings agencies and hedge funds. It is not acceptable that Europe should periodically have to suffer the consequences of America’s faulty financial system.
With regard to hedge funds, the financial ‘police’ in the UK and the USA have just temporarily prohibited speculation on falling asset values, and quite rightly so! The failure of some of these murky operators would accelerate the crisis in the deregulated sector. Not all investment funds are pernicious and some of them are actually necessary, but we cannot permit the continued existence of financial black holes. Reviews are worthwhile and indeed essential but what we need right now is action! That is the thrust of the two reports we are debating."@en1
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