Local view for "http://purl.org/linkedpolitics/eu/plenary/2009-05-06-Speech-3-076"
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"en.20090506.3.3-076"2
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"Mr President, the agreed CRD text is a good step forward on core capital, exposures and supervision. The securitisation provision, now with proportional penalties for due diligence failures, is not perfect but it is fit for purpose – the purpose to rebuild confidence and repair the securitisation market. Review at the end of the year on the retention per cent means we have covered all bases, including international cooperation.
European problems with securitisation came on the buy-side from the US, but fear has dried up our own securitisation. Banks have lost the main instrument that enabled them to sell on their loans – an important instrument because it freed up capital for further lending and was a major driver for growth. In 2006-7 European securitisations totalled EUR 800 billion: EUR 526 billion supporting European mortgages and tens of billions each on car purchases, credit card spending and SME loans – yes, including something like EUR 40 billion of German SME loans. These are the very areas where the credit crunch is biting hardest. It is no coincidence. Because we have to face the fact that bank lending is limited by their capital and they are stuck until either more capital is raised or the loan sold on. So the sooner that we can get Europe’s quality control securitisation working, the better.
It may seem that, if 5% retention guarantees good behaviour by banks, then 10% would guarantee it more, but the retained portion attracts a capital charge so it reduces the capital that can be freed up and in turn restricts lending. A 10% hit during times of ongoing capital stress would just hurt borrowers and businesses, not banks. That is why other forums – also having started with higher retention proposals – are tending to settle on 5% too.
Ultimately, it will be intelligent supervisory vigilance that will prevent future new abuses rather than regulation for the old and gone. On Level 3 committees we can see that, despite the problems and failures in supervision, it is Parliament that has recognised better than Member States that holes cannot be plugged without resources. It has followed this by demanding more resources for those committees. International accounting and audit bodies will also benefit from more diversified neutral funding and the EU can lead off on this, but not indefinitely if other countries do not join in. I am pleased to have clarified that. Funding should also be sought from the user-side such as investors."@en1
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