Credit requirements directives: Directives 2006/48/EC and 2006/49/EC - Community programme for financial services, financial reporting and auditing
President
The next item is the joint debate on:
the report by Mr Karas, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a directive of the European Parliament and of the Council amending Directives 2006/48/EC and 2006/49/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management - C6-0339/2008 -, and
the report by Mr Hoppenstedt, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a decision of the European Parliament and of the Council establishing a Community programme to support specific activities in the field of financial services, financial reporting and auditing - C6-0031/2009 -.
Othmar Karas
rapporteur. - (DE) Madam President, Commissioner, ladies and gentlemen, today I have the opportunity to present to you not only the findings of the Committee on Economic and Monetary Affairs but also the results of long negotiations with the Council and the Commission. Last week we reached agreement in a trialogue on a common approach to developing a new framework for the financial markets.
I tell you, I ask you, to look on these proposals, which we are debating today, as a complete package. Some of us wanted more, some of us wanted less, in this Parliament, in the Council and in the Commission. I can tell you that we did not agree on the smallest common denominator but attempted to agree on more than the biggest common denominator.
We have proposed a line for the next steps, because this can only be a first step. We have not come up with an answer to the economic and financial crisis. But we are ready to take a new step, to achieve a breakthrough in the development of a new framework for the financial markets, which will lead to the simplification of financial market regulation and to Europeanisation, which will create certainty on the financial markets and stability for all market participants, which represents a development of the financial markets, is a reaction to the financial crisis and safeguards the decentralised sector.
I would like to thank Mrs Berès, Mrs Bowles and my fellow Members in the other groups for their support and, especially, the Secretariat and all staff members.
This proposal leads to more transparency, more legal certainty and more stability and therefore creates more trust in a time characterised by a lack of trust. It is not the only body of laws we are proposing. In the last plenary sitting we decided to regulate the rating agencies, we adopted the new supervisory structures for the insurance industry, and the Commission presented a new proposal for hedge funds. It is an additional package, with which we are pointing the way.
There are five points. The first is financial market supervision, where, as a first step, we have strengthened the role of CEPS and that of the European Central Bank. We have also enhanced the balance between home and host regulators. The second step is that we must now achieve stronger integration of financial market supervision. All the requirements are contained in this report, because we need an integrated supervision structure to enable us to overcome the new challenges.
The second area is securitisation, the granting of loans. For the first time we are introducing the rule that a loan can only be granted if the lender holds a retention for securitisation in its books. We have provided for a retention of at least 5%, but we have commissioned CEPS to look into whether an increase is reasonable and to publish its findings in a Commission review before the end of the year, taking international developments into consideration. This is an important signal to the markets: without a retention there is nothing. The retention leads to transparency and also to better control.
Thirdly, we have regulated large exposures in terms of the own funds/risk ratio. No large exposure may account for more than 25% of a bank's own funds. And, when banks lend to each other, the sum of EUR 150 million must not be exceeded.
The fourth point is that we are working to improve the quality of own funds and hybrid capital. However, we are taking into account existing statutory regulations in the Member States, because we do not wish to have procyclical effects during the economic and financial crisis. That we have created a correct, professional transitional regulation is an important point, especially for cooperatives, savings banks and silent capital contributions in Germany. Nonetheless, there is still a lot to do.
I would like to single out pro-cyclicality as the fifth point.
This reports states that the Commission must clearly identify the pro-cyclical effects of the existing directives very quickly and that we must see that the necessary change is made before the autumn.
I call on you to accept this report and the proposal for agreement with the trilogue so that we, as the European Union and as the European Parliament, can maintain our leading role in the reform of the financial markets. It is also important that we implement all the requirements for future development so that can open the door to an improved, more stable and more trustful financial market and once again assume a leading role at the next G20 Summit. I ask for your support in this.
Karsten Friedrich Hoppenstedt
rapporteur. - (DE) Mr President, Commissioner, ladies and gentlemen, the lack of financial oversight operating uniformly throughout Europe and the failure of the system at international and European level are some of the reasons for the current financial and economic crisis. We must therefore ensure that information is integrated in the system in a coordinated manner and that the individual organisations exchange information so as to prevent another crisis.
The good public oversight operating in some Member States must be optimised for all 27 Member States to ensure the good transfer of information. This needs financial resources. We must resolve the crisis now and provide the resources now. This is exactly what the Community programme to support specific activities in the field of financial services, financial reporting and auditing achieves.
I welcome the fact that the Commission has responded to Parliament's call for action and is proposing to provide financial support for the Community in the financial services sector and in the financial reporting and auditing areas as well as for the activities of certain European and international institutions in order to ensure that Community policies in this area are effective. A new Community programme will be brought out to enable direct contributions to be made to finance these individual institutions from the Community budget.
Cofinancing of this kind for the committees and the supervisory authorities can to a large degree help to ensure that they fulfil their mandates independently and efficiently. The programme must be flexibly designed and adequately funded to ensure that the requirements of at least the level 3 committees, including CESR, CEIOPS and CEBS, are covered. The Commission proposal was 40% below what the level 3 committees considered necessary for the next four years. There was little appetite in the Council for substantially increasing the budget even though it was clear that considerable improvement of financial market supervision was called for.
At the end of the negotiations we had agreed on a figure of approximately EUR 40 million over the four years: EUR 500 000 for the level 3 committees for 2009 and a further EUR 38.7 million from 2010 to 2013, 13.5 million of which are earmarked for these committees. As regards the financial reporting and auditing committees, the original Commission proposal for reform of this organisation was too weak. This means, therefore, that we, as Parliament, have been able to make improvements and, following the trialogue negotiations, we have achieved an acceptable result as far as the individual financial reference amounts and financing periods are concerned. The latest findings of the Larosière Group and of the report indicate that there are goods reasons why the Commission should present to Parliament and the Council no later than 1 July 2010 a report and the necessary legislative proposals for further reform of the regulation and oversight of the European financial markets to adapt this programme to the changes made.
Against the backdrop of the current financial crisis it would seem essential to give top priority to expanding convergence on oversight and cooperating in the area of financial services in connection with financial reporting and auditing.
In the plenary session on Solvency II 14 days ago I said that it was important that Europe sent clear signals that were heeded in the rest of the world. I believe that we have sent clear signals in recent weeks, including with the report by Mr Karas on the rating agencies, that we can be taken seriously by our international partners and that we are not just passengers, as we have been over the last few decades. This is a good signal.
I would like to thank my shadow rapporteurs, Mrs Bowles and Mrs Berès. As this is my last speech in this Parliament, I would also like to thank the Commission, my fellow Members and the Council for their cooperation. It has been a pleasure to work with you all. Let me give you an example of a pleasing result of this cooperation. The Czech Presidency of the Council decided 30 minutes ago to accept the outcome negotiated in the trialogue negotiations. We have a proposal that we can adopt today and I am certain that the large Groups in this Parliament will also vote in favour of these proposals.
Many thanks once again for your cooperation.
Charlie McCreevy
Member of the Commission. - Mr President, two weeks after our last debate on measures against the financial crisis, I welcome this opportunity to discuss with you further actions which were jointly taken to face this challenge.
Today I am particularly pleased to welcome the prospect of a first-reading agreement on two key measures: the Community programme to support specific activities in the field of financial services, financial reporting and auditing, and the review of the Capital Requirements Directive (CRD). They would both make an important contribution, not only to the recovery efforts, but crucially to the long-term effectiveness of financial supervision and the strength of the EU financial sector.
Firstly I would like to welcome Parliament's amendments to the proposal for a Community programme to support specific activities in the field of financial services, financial reporting and auditing. The financial crisis has demonstrated the need to further strengthen EU supervisory arrangements. It has also reminded us of the importance of transparency and independence for bodies active in the field of financial reporting and auditing standards.
For the Commission, an essential move to achieve those aims is to reinforce the role of the key bodies in these fields, but at European and at international level. This is why the Commission proposed to provide them with financial support.
We believe there is a consensus that these bodies all need stable, diversified and adequate funding. When adopted, the programme will enable them to accomplish their mission in a more independent and more efficient manner. For the three committees of supervisors, the programme will be a first step in the strengthening of their capabilities in line with the recommendations set out in the de Larosière report.
It would give them the opportunity to develop projects which will enhance the convergence of supervision in Europe and the cooperation between national supervisors. In particular, exchange of information will be made easier by the setting-up of new IT tools. Common training for national supervisors will enable the emergence of a common supervisory culture.
The programme will also prepare the ground for the next steps of supervisory reforms, which the Commission will be dealing with in the coming weeks. We also need to ensure high quality for finance reporting and auditing rules, which are harmonised at international level. We need to make sure that there is a level playing field for European users and these rules are being developed by the standard-setters.
This is an important condition for creating a favourable business environment for firms, even more so in the current economic context. By avoiding the reliance of the International Accounting Standards Committee Foundation, the European Financial Reporting Advisory Group and the international Public Oversight Board on voluntary funding from non-diversified potentially interested parties, we can improve the quality and credibility of the standard-setting process.
By strengthening the European Financial Reporting Advisory Group we will provide stronger advice for the European Union when international financial reporting standards are being developed by the International Accounting Standards Board. By helping the international Public Oversight Board to increase its oversight capacities, we aim to ensure that the international auditing standards will fit the EU's requirements for quality when applying them.
The proposed amendments make adjustments to the Commission's proposal on the way the envelope should be redistributed between beneficiaries. We are not fully satisfied with this. In particular we would have preferred that no amounts be redistributed from the European Financial Reporting Advisory Group (EFRAG) to the EU Committees of Supervisors.
EFRAG is a European body. It is an essential element of the EU's influence in the standard-setting process of the International Accounting Standards Committee Foundation. Distributing amounts under the envelope from EFRAG to other European bodies does not send the right signal. However, we recognise that only a very limited amount will be redistributed from EFRAG to the EU Committees of Supervisors.
We also believe we can still achieve most of the objectives we are aiming at under the programme and for these reasons we can support the amendments. As Mr Hoppenstedt said, I am pleased to take this opportunity to announce that Coreper has adopted proposed amendments this morning and this means both the Council and the Commission can now support the Parliament proposal.
Moving to the review of the CRD, I am pleased to express the Commission's general support for Parliament's amendments. General support, but not full support, as the Commission still harbours some concerns on securitisation.
The proposal adopted by the Commission last October is the outcome of extensive consultation, a process that started before the financial crisis. In many aspects this review of the CRD has turned out to be a timely and robust first response to the crisis.
The European Parliament has commendably responded with a sense of urgency to adopt this proposal at first reading. As a result, we now have tighter liquidity risk management principles, strong rules on risk diversification, strengthened supervision, a better capital base, and skin in the game, coupled with due diligence requirements for securitisation. By any measure this is significant headway.
On the now famous 5% retention for securitisation, I am pleased to see that Parliament has resisted the call from industry to do away with what they had only last year characterised as complete nonsense. I would like to say that the retention rule has emerged as something that is not nonsense but plain common sense. It is now recognised by the G20 as a key measure to strengthen the financial system. Looking forward, the Commission will, without a shadow of a doubt, support any further efforts making the text even more watertight.
The Commission has been at the forefront of the global initiatives to tackle the crisis. The Basel Committee on Banking Supervision will follow suit. I therefore very much welcome the clause providing for a review by the end of 2009 suggested by the European Parliament. The Committee will consider the need for an increase of the retention requirement, taking into account international developments.
I am also pleased to see that Parliament has resisted the calls from industry for less stringent rules on interbank risks. Let us just remind ourselves that banks are not risk free. This is a crucial lesson of the financial crisis. Adequate diversification and collateral are critical to ensuring financial stability.
On own funds I understand the reluctance of some Members that Parliament could consider the downgrading of certain national instruments that do not meet the eligibility criteria for Core Tier 1. Let me be more precise. I understand this reluctance, but only for the current economic context. Much recovery is on track. The Commission is strongly committed to further enhancing the quality of own funds, as agreed at the G20 Summit.
As regards securitisation, the Commission still considers that in some aspects there would have been merit in further clarifying and specifying the way the 5% retention will be calculated. I understand that the European Parliament has worked under time pressure and I am pleased that the Commission has been given a second chance to tighten up the text in a report due by the end of 2009.
The two reports on which you will vote today demonstrate that, when MEPs, Ministers of Finance and Commissioners think ahead of the curve and provide political leadership, a speedy and effective response to the challenges we face is possible. Both measures discussed today will significantly contribute to paving the way for the revision of the EU financial and supervisory framework.
In addition to these measures, last Wednesday we presented a package of crucial initiatives to respond to the financial crisis, on alternative investment funds, on remuneration structures and on packaged retail investment products.
Last but not least, in three weeks' time a Commission communication will set out its views on follow-up actions to the recommendations of the de Larosière report on financial supervision. Upon endorsement by the June European Council, further legislative proposals will be presented in the autumn.
Gary Titley
rapporteur for the opinion of the Committee on Budgets. - Mr President, I rise on Mr Hoppenstedt's report to give the Budget Committee's opinion. Like Mr Hoppenstedt, this will be my last speech before this Chamber after 20 years.
The Budget Committee recognises the importance of these proposals and their urgency. It is quite clear that some key EU policies will be undermined without proper financing and therefore we are happy to support the proposal. However, we would point that this money is coming from the margin of heading 1a, so that will reduce the margin and therefore reduce the availability of funding for other projects which may be important in the future. We should bear that in mind.
Secondly, we should also ensure that these organisations do not in any way become agencies because, if they did, they would of course be subject to the interinstitutional agreement on agencies.
Finally, we would not want the Budget Committee's position to be in any way undermined by the rush for these proposals. That is why the Budget Committee was happy to support Mr McCreevy's proposal on Monday night about interim funding, so that we can ensure that proper financial procedures and a proper trialogue takes place on the financial implication of these proposals.
President
Thank you, Mr Titley, for the 20 years you have dedicated to the European cause.
John Purvis
on behalf of the PPE-DE Group. - Mr President, we seem to be a succession of old hands rising to speak, but would that I were not making my last speech in the European Parliament in the worst economic situation of my lifetime - and that is a lifetime that started in the blighted 1930s - and would that I were not also having to speak in a debate on a piece of European legislation which is not, I am afraid, wholly satisfactory: the Capital Requirements Directive.
I and my group will support the compromise reached by rapporteur Karas with great skill and patience under heavy time pressure and in the current feverish economic circumstances. But I hope my colleagues who return here after the election will revert to the full codecision process, which can really fully test and refine our legislation. I fear that much of this over-hasty legislation will reveal unintended and untoward consequences. For example, I fear that the rules on large exposures, extolled by Commissioner McCreevy and prompted by genuine concerns about counterparty risk, will make it that much more difficult to reactivate the interbank money market to its full and desirable extent. I fear that the new retention rule, also extolled by Commissioner McCreevy, will, in fact, impede the revival of securitisation, which is an essential and predominantly beneficial mechanism for funding mortgages, car loans and consumer spending.
All the government-induced stimuli which one might contemplate cannot compensate for a moribund securitisation market. So I just hope that, when the time comes to review this directive, the necessary impact assessments will have been made, that wise counsels will have been consulted, that the global context will have been properly and fully considered and that fully appropriate rules are ultimately implemented.
Pervenche Berès
Commissioner, I deplore the absence of the Council Presidency. Mr McCreevy, you have made your mandate as commissioner for the internal market one of regulatory standstill. Unfortunately - I do not know how to phrase this - you should have changed your mind and ultimately taken the advice of the Socialist Group in the European Parliament which, when Mr Katiforis's report was presented, told you that legislation on rating agencies was needed, or you should have listened to our rapporteur, Mr Rasmussen, who told you that retention on securitisation needed to be introduced in the banking sector.
Finally, you should have also decided to introduce guarantees for bank deposits. You see, the regulatory holiday is not news. Fortunately, we will no longer have to address these issues with you in the next parliamentary term. I say this because the last proposal that you submitted to us on alternative funds and investment funds was unreasonable, and the fact that you will not even agree to come and discuss it with the Committee on Economic and Monetary Affairs proves it.
As for Mr Karas's report, I think it is an important report that we should adopt today, because it gives the signal, within the Union, to our banking sector and to all our G20 partners that retention must be introduced for securitisation. Own funds must be defined better. In future, there will need to be more transnational supervision of groups, and integrated supervision along the lines of Jacques de Larosière's report. Finally, we have to organise clearing houses for derivatives and credit default swaps.
I would also like to thank Mr Karas for the way in which we have been able to re-open the trialogue so that we will be able, in the period before this directive comes into force, to revise the retention threshold. Having ordered studies, and having given CEBS a mandate to determine under which conditions this retention should be expertly planned, we have been able to verify whether the 5% threshold that we are going to vote on today was the appropriate threshold, even more so now that we have corrected the scope of the retention by making what I believe was the right choice and getting rid of the guarantees sought by Mr Purvis.
As for Mr Hoppenstedt's report, I wish to thank him most sincerely, as I believe that, here, we are getting involved, usefully and positively. In the past, the Commission would tell us that it could not fund level 3 committees; today, it is possible even before these committees become agencies. We welcome this. At the rapporteur's instigation, both the operating costs and the project costs will thus be eligible for funding, and Parliament will have a clear insight into the nature of the projects being funded in this way. We can only welcome this; it is along the right lines.
Finally, in relation to accounting standards and the conditions in which international organisations contribute to their drafting, we have put pressure on these organisations so that they improve their governance and define their roles better. I believe that in this area, too, the European Parliament, with Mr Hoppenstedt's report, has done a useful job, and I wish to thank all of the rapporteurs, as well as this House if, as I hope, it adopts these two reports by a large majority later on.
Sharon Bowles
on behalf of the ALDE Group. - 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.
Konstantinos Droutsas
on behalf of the GUE/NGL Group. - (EL) Mr President, today's economic crisis is a crisis of over-production and over-accumulation of capital. It is, as everyone now admits, a crisis of the capitalist system itself. Efforts to present this crisis as a financial crisis, as a liquidity crisis, are being made in order to mislead the workers and to avoid acknowledging the real causes, which lead to increased unemployment, reduced incomes, flexible labour relations and the all-out attack on them.
The measures being taken to supervise accounting standards with controls on lines of credit and own funds, not only fail to limit the unaccountability of the banks; in essence they are measures which the banks themselves are seeking in order to safeguard that unaccountability beneath superficial supervision and control, supervision which, instead of protecting the interests of small depositors who have been and continue to be at risk from the economic crisis, will safeguard the conditions of competition of the banks and will allow new tools to be used to increase their profits.
The reserve which the banks demonstrated even to their cofinancing by the state, in return for even minimal controls, is typical of their stand, a stand of unaccountability which, in the jungle of the market, again results in increased profits and prices, while the workers are again being called upon to pay the costs of the crisis. The workers are not being deceived or disorientated by the decisions of the European Union to end the crisis. They know that these decisions put the entire weight of the crisis onto their shoulders and seek to safeguard even greater profits for capital.
Nils Lundgren
on behalf of the IND/DEM Group. - (SV) Thank you, Mr President. We have now gone through a global financial meltdown and it is continuing to cause us problems. We need then to analyse why this has happened before we begin to act at EU level. I would like to say the following. Firstly, we have an ownerless capitalism. The large companies are no longer governed by their shareholders, but by pension funds, insurance companies and other types of fund. This leads to a situation in which officials can govern however they want to, and they do this in a way that suits their own interests, which are in increasing the risks enormously, and then the result is what we are seeing now. We have banks that are 'too big to fail', as the catchphrase goes. The Glass-Steagall Act was intended to prevent this, but it has been abolished in the US. We ought to consider whether this might not be part of the solution. We have deposit guarantees for small-scale savers and even quite large-scale savers. This means that people depositing money in banks do not give two hoots whether the banks are safe, as they know that taxpayers will protect them. This is a problem. The heads of the central banks do not burst the bubbles, but rather are praised when they constantly ensure that the bubbles can continue to grow ad infinitum.
Alan Greenspan gained an immensely good reputation for something which, in practice, is a significant explanation for why things have become so bad. Subprime lending was the start of this and a fundamental part, and it was introduced by politicians who are now saying that we will solve this by taking more power away from the market. I doubt that. The regulatory system in Basel II was circumvented by means of shadow banking. Now we are talking about new rules for capital. If this is more shadow banking, it is not going to help. I therefore believe that we should tackle this in a different way and ask what should be done. Then we will discover that very little should be done at EU level. This is a global problem and should be dealt with elsewhere.
Sergej Kozlík
- (SK) Mr President, ladies and gentlemen, in my opinion one of the best steps taken by the European Parliament in the current functional period was last year's decision on the need for close regulation and greater stability in the financial system. It is a pity this did not happen three years earlier. The submission of a draft directive on capital requirements is another practical outcome in this context. The financial crisis has drawn attention to the shortcomings in supervision mechanisms, including consolidated supervision.
I agree that the starting point for resolving the problem should be the creation of a decentralised European system of banking supervision bodies based on the model of the European central banks. I am also in favour of stricter securitisation rules. Originators should hold a certain percentage of the risk arising from the exposures that they securitise and further due diligence should be required from the investor. This is the only way to achieve progress.
Zsolt László Becsey
(HU) Thank you, Mr President. I wish to congratulate the rapporteurs and the groups' shadow rapporteurs for the compromise that has been reached. Although many of us find a large number of the arguments far from ideal or beneficial, I think it is important that the regulation is drawn up right now, before the elections.
I would like to make a couple of remarks. 1. As the rapporteur responsible for microcredit, I welcome the fact that the report featured the requirement, which also appeared in my report, for a risk management system to be devised reflecting microcredit features, such as no traditional collateral and excess. I hope this will happen as soon as possible. I would like to thank Mrs Berès for her amendment to the proposal. 2. I was highly critical of the supervisory arrangements even during the debate on the 2005 amendment. This applies particularly to the supervision of parent institutions, which actually also raises constitutional concerns with regard to deployment in the country of the subsidiaries, although subsidiaries are generally located in the new Member States.
This vulnerability is reduced, if not actually stopped by the collegiate system which, in my view, is still only a step in the right direction, but not the real solution. Nevertheless, for the sake of compromise, I regard this situation as progress mainly because the current compromise also advocates that the draft regulation on the integrated supervisory system should be produced quickly based on the De Larosière material, which will already be good, in our opinion, as well as providing a very significant benefit for communitarisation.
I would like to say a special word of thanks for the solidarity shown to the countries outside the euro zone in connection with the amendment to Article 153(3) as, with the acceptance of my proposal, the separate risk premium will not apply until the end of 2015 to the credits for these countries, which they have generally received in euros from the public finances or central bank. Taking all these points into account, I propose block-voting on the compromise, including the 5% retention, since this in itself marks some measure of progress.
Finally, as this is my last speech, I would also like to thank you, Madam President, and all my fellow Members for the work which I have been able to do here for the last five years.
Elisa Ferreira
(PT) This year European wealth will fall by 4% and unemployment will increase up to 26 million. The world and the European Union should have done more, better and earlier with regard to regulating the financial markets.
I welcome the work done by this Parliament, much of it in an atmosphere of urgency, but I would underline the contribution made by the Socialist Group in the European Parliament, which should have received more recognition at the appropriate time.
I regret that the Commission's reaction has been slower, more piecemeal and more limited than the situation required and requires, as illustrated by the recent proposal on hedge funds.
The adoption of the directive on capital requirements is another step in the right direction. We know that it is not ambitious enough and falls short of expectations, but today the most important thing is to give a clear signal to the financial institutions and markets that business as usual has come to an end. I applaud the work of the rapporteur and shadow rapporteurs, particularly Pervenche Berès, in their search for a compromise.
This directive does introduce clear rules, but a great deal of work will still have to be done during the next revision on some of the more controversial issues, particularly on the level of retention for the purposes of securitisation.
Today it is vital that this Parliament ensures the adoption of this directive, thus sending a clear message to European citizens that things are changing and will continue to change, and that we are particularly concerned about them.
Wolf Klinz
(DE) Mr President, ladies and gentlemen, the financial crisis has made it clear that the financial market framework of the European Union must be revised. My Group supports the proposals developed in the trialogue negotiations, especially the proposals for a new Capital Requirements Directive for banks. Risk-based supervision will increase, the abuse of special purpose vehicles will disappear and the quality of structured products will improve as a result of the 5% retention for securitisation. However, I regret that the rule for in-year interbank loans is very restrictive and that silent capital contributions are accepted as full-value capital for a transitional period only.
The progress achieved with the restructuring of the financial market framework is good but not yet sufficient. The work will therefore continue. I hope that the banks will prove to be more cooperative than they have been in the last few months, when I saw them more in the role of a brakeman than a partner in search of forward-looking solutions.
Werner Langen
(DE) Mr President, I would first like to say that we have started on this second project, which is under discussion today, to put financial market regulation on a normal footing. The financial market crisis can be attributed partly to a failure of the markets and partly to a failure of regulation. We have drawn up a list of measures that must be regulated by the rating agencies. We have adopted resolutions on the Capital Requirements Directive, on managers' salaries, on hedge funds, on accounting regulations and on the European supervisory structure. Today, we are dealing with the second point.
Negotiations are being conducted on the basis of a vote in committee, not in the normal first reading procedure but on the basis of an agreement reached between the Council, the Commission and Parliament. I acknowledge that Mr Karas has achieved many things. However, a large number of fellow Members, like me, are of a different opinion, as Mr Klinz pointed out. This primarily relates to the retention for securitisation. The securitisation market and the financial market crisis arose not least because financial market products without own risk were created. That is why the banks no longer trust each other, because no one has securities for which they take responsibility through risk. The proposal is for a 5% retention. In my opinion, 10% is far more appropriate and that is why I have tabled an amendment. I am certain that the Council, if it accepts all the other things, will have to consider this 10% retention. We, as Parliament, have a responsibility to give citizens further assurances that a global financial market crisis of this kind can never be repeated.
That is why I propose and request that we accept the compromise reached by Mr Karas apart from the 10% retention and the deduction of silent capital contributions.
Ieke van den Burg
Mr President, I am standing here with mixed feelings in my last debate in this House. I am very happy with the decision that we took on the Hoppenstedt report to increase the funding of the Level 3 committees. This is a step towards strong European supervision of the financial markets that have developed far beyond national borders. I have been a strong supporter of this and I hope the debate on this will continue very strongly in the next term.
The other dossier on the Capital Requirements Directive (CRD) is not, in my view, a good example of better regulation under the Lamfalussy process that we have developed in the 10 years I have been active. I will support the results because we need to send a strong signal to the market, but I would have preferred a more principles-based approach and more transparent consultation in the political process. This was the pressure of obtaining this hasty result. I hope that, at the end of the year when there will be a fuller review of the CRD, the Lamfalussy process will also be taken properly into account. I strongly recommend that the Committee on Economic and Monetary Affairs reinstate this process.
In my last speech, I would also link to what Ms Berès has said and would say to Mr McCreevy that it is a pity that what he has done to regulate these financial markets is really too little and too late. I want to express my appreciation to my colleagues in the Committee on Economic and Monetary Affairs for their cooperation over these 10 years. I hope they get a Commissioner in the new term who will be exclusively devoted to the financial markets, handling a portfolio which really focuses on this very important subject that brought us into these dire straits nowadays, and who will really be devoted to regulation and proper European supervision of the financial markets.
Udo Bullmann
(DE) Mr President, ladies and gentlemen, if you want to drain a bog you do not ask the fattest frogs how they would like it to happen. That is exactly the problem with the report on the Capital Requirements Directive, which is under discussion today. If we do not wish to still be setting up bad banks in ten or twenty years' time then we must get banks and credit institutions to assume a significant business risk if they continue to deal in critical products. Five per cent is not significant.
Commissioner McCreevy brought up 15% and was then beaten down to 5% by the industry. The Council went along with this and the European Parliament cut a very sorry figure indeed. We German Social Democrats will vote for a higher retention and we will also vote for the continuation of the silent capital contributions, because a competition policy that attacks a business model and that has nothing to do with restructuring the banks is unfair.
I hope that we will adopt a reasonable resolution and that, after 7 June, we will have a Parliament that, with courage and more guts, speaks a clear language during the restructuring of the financial market.
Antolín Sánchez Presedo
(ES) Mr President, as a first response to the financial crisis of August 2007, the adoption of this directive should not be delayed. In view of the circumstances, it should be applied with prudence, in order to avoid U-turns, and it should be accompanied by a more ambitious revision, in accordance with international developments.
The financial institutions require a solid capital base and need to compete in a balanced way through a harmonised definition of own funds, in particular of hybrid instruments, and a proportionate strengthening of the management of major risks. It is vital to bring in more transparency and align the interests of issuers and investors in securitisation processes. Retaining at least 5% of securitised products on the balance sheet, avoiding multiple use of such products and stepping up the due diligence of investors are steps in this direction. Creating colleges of supervisors for cross-border groups and making the role of the Committee of European Banking Supervisors more robust are moves towards more fully integrated European supervision.
Margarita Starkevičiūt
(LT) I would also like to thank my colleagues for five excellent years of cooperation, although I have to say that there are still unsolved questions for the next legislative term. Above all, this directive does not solve the problem of assessing bank activities.
The risk-based approach was not fit for purpose and we really need to think about another type of assessment, perhaps what is known as the performance-based approach. Moreover, we still have not decided who will pay. Which country's tax payers are going to risk their own money, if a large European group has problems?
Will a special fund be set up at European level? Will various countries contribute to a joint fund? Until we have the answer, we cannot say that we have strong and well prepared regulation of the financial sector.
Miloslav Ransdorf
- (CS) Mr President, I firmly believe that the measures we are debating here should also be of a preventive nature, since the situation is very grave. The volume of financial derivatives on the world market is five times larger than the worldwide gross domestic product and this is a bubble that is going to burst, with the risk that gross domestic product will drop dramatically, particularly in the United States. The whole world, including European countries, would suffer. There is also the danger of hyperinflation, since the prevailing idea, especially in the United States, appears to be that all problems can be resolved by pouring more and more money into the system, even though this strategy displays serious shortcomings. I therefore believe that the preventive aspect is highly important, and that some of the more controversial instruments used on the financial markets, such as shadow banking for example, should simply be banned.
President
Before Commissioner McCreevy takes the floor, because several Members have today spoken for the last time in the Chamber, I feel it is my duty, on behalf not only of the MEPs but also of all European citizens and voters, to thank them for their commitment over the years. I believe that their chosen task of seeking to improve things deserves the gratitude of all our fellow citizens.
Charlie McCreevy
Member of the Commission. - Mr President, firstly may I thank in particular the rapporteurs, Mr Karas and Mr Hoppenstedt, and others for their dedication in finding compromises in these two particular areas.
As regards the Hoppenstedt report, the positive outcome of Coreper this morning paves the way for an adoption at first reading. An agreement on this strategic initiative is very welcome because it sends the right signal: a signal of our determination to respond to the financial crisis, to strengthen financial supervision and to improve the standard assessing process for financial reporting and auditing. But this is only a first step in a very long process. In the months to come, I look forward to continuing this work with you in the new Parliament.
On securitisation, we all agree that the 5% retention requirement is a first step. The Basel Committee will work on quantitative retention. This has been required by the G20. The European Union is ahead of the curve, and we will contribute to bringing about further consistency at global level.
Let me just make a point concerning securitisation. Mrs Bowles made a pretty strong contribution in this regard. She is very much for securitisation and pointed out the good aspects of it and the amount of money that is contributed to the capital markets for small and medium-sized enterprises and to lenders at large in all Member States of the European Union. In case there is any impression that I do not see the benefits of securitisation over the years, may I say that I certainly do! In my previous capacity, and long before I came here, I was aware of the benefits of securitisations. However, the issue is what proportion the originating securitiser should hold in that particular matter. I accept what Mrs Bowles said: that in future a holding of whatever percentage will attract a capital charge. One cannot be certain as to when the current financial crisis will end. But, irrespective of when that end is going to be, I think we can be absolutely certain in years to come that financial institutions will be required, at all levels, to hold more significant and more quality capital against their lending. I will not be here - but many of you will - but, whatever the end is, that will be the inevitable outcome of this particular financial crisis - not immediately, not maybe in the medium term, but in the longer term that will be a certainty. If I looked into my crystal ball, that is what I would see in years to come. So it is the percentage which is being debated. People know my views on this. I have held very strong views on this for a long period of time.
Various amendments have been put forward during the Council of Ministers stage and with the European Parliament about different 'outs' on one thing and another, which my officials, at my request, are very, very strongly against, because I strongly believe in the very simple proposition that 5% of something is better than 55% of zero. The more outs that there are - we can have 5%, 10%, 15% - 15% of zero is still zero. That is why I welcome the opportunity that the Commission in its report by the end of this year will come back to this particular matter in order to ensure that the wording is fairly tightened up. I am strongly of that view because I do not wish to see particular outs. But I readily appreciate what Mrs Bowles and others have said regarding the merits of securitisations for the capital market. I hope I have never given the impression that I did not.
Finally, may I, too, join with the President in wishing those Members who are retiring well in their future careers, whatever they might be. I have known most of them in some capacity or other in my five years here and I appreciate their contributions, even though I have not always agreed with them. I suppose I should not single out any one person, but I would like to make special mention of Mr Purvis in this regard. I always found his advice to be wise, measured, considered and not dogmatic, and I wish him, in particular, a very successful future.
Othmar Karas
rapporteur. - (DE) Mr President, ladies and gentlemen, I would first like to thank you for your support and for the signal we are sending to savers, businesses, banks and the world of finance.
The debate was very open. It also highlighted the weaknesses and the need for further development. I can tell you that all your wishes, as well as your criticisms and reservations, played a role in the negotiations, that we tried to incorporate them in recitals and in the request for reviews. There is nothing that was said here today that did not also play a role in the agreement presented - in some cases not a very strong role - but everything played a role.
It is therefore absolutely clear that this is an important step forward, but it is not the final step, because we are announcing, giving notice of and promoting further steps in this agreement and specifying the direction for this debate. In other words, the debate will continue, it has to continue. But I believe that it is important that we send a clear signal now, in this legislative period, that we are competent, that we wish to create trust, security and stability, that we can react quickly and that we know what still needs to be done in the future. I therefore call on you to take this step together and with a big majority.
Thank you very much for the debate.
Karsten Friedrich Hoppenstedt
rapporteur. - (DE) Mr President, I have already given my opinion on certain things in the first round of talks. However, I would like to say once again very clearly that the world, including our partners in the United States, China and other places, is watching the European Union, the Council, the Commission and Parliament to see how we will react to the crisis. I have already said that there has been a reaction, which we notice in certain rules that are being re-drafted. Things are moving somewhat in the US in terms of the Reinsurance Directive and other things like that, such as the collaterals. Moreover, the received wisdom is that, if we, as Europeans, do not have anything concrete in our hands, then our partners will not react.
Last month and this month we took decisions and got them off the ground, and we managed to find reasonable solutions together with the Council.
I would once again like to take this opportunity to thank the Commission, which was sometimes a bit heavyhanded, and the Council, where we tried to find reasonable solutions in night sittings and in many trialogue sittings, because, just an hour ago, they also approved the reasonable compromise we found.
I of course thank my co-combatants in the Committee on Economic and Monetary Affairs, Mrs Berès, Mrs Bowles and others, but also the members of staff, who had to bear a large part of the burden.
I believe that it is important to perhaps point out once again that I was involved in the introduction of the European Single Market, as coordinator during the introduction of the euro and other things like that. These are milestones that have naturally informed this work and also policy making. It has been fun working with you all, and I should once again like to thank my fellow Members, the Commission and the Council - I have already said that - for their cooperation. I wish all those who will voluntarily not be returning all the best for the future.
There are many tasks, including the task of conveying just how important the European Union is and what an important job the European Parliament does. It is also important for the elections to be held in Germany on 7 June and elsewhere from 4 to 7 June that people's attention is drawn to just how important our work is. I hope that there will then be a high turnout. Once again, many thanks to you all and all the best for the future. This is my last speech, as I have already said.
President
The joint debate is closed.
The vote will take place today, Wednesday 6 May 2009.
Written statements (Rule 142)
Paolo Bartolozzi  
Mr President, ladies and gentlemen, by amending the directives on credit institutions, their own funds, large exposures, supervisory arrangements, and crisis management, the European Union is moving towards a general realignment of the entire system.
The amended directive would eliminate the discretion the Member States have over their own funds, which would hinder the harmonisation of supervisory and fair competition practices between banks. These discrepancies must be overcome by common rules to allow audit bodies and central banks to face up to the possible insolvency of the banking system, particularly in countries that have adopted the euro. The amendments concern the need to tighten up the supervision of cross-border banking groups.
The reopening of interinstitutional negotiations on the agreement reached between the European Parliament and the Council concerned the minimum threshold to be allocated to the nominal value of the securitisations. This refers to the amount of risk that banks must retain in their own balance sheets when they place 'structured' products with savers.
Within the Council all the Member States voted to keep a threshold of 5%. Raising it would make it impossible for the securitisation market to recover and would not help to make the markets safe again.
(The sitting was suspended at 11.50 a.m. and resumed at 12.05 p.m.)
Andreas Mölzer
(DE) Madam President, I refer to Rule 145 of the Rules of Procedure. In the sitting of 24 April, in my absence during the vote HansPeter Martin claimed that a vote was illegally cast with a voting card from my seat by an unauthorised person. The Presidency was able to reject this immediately as incorrect.
I understand that, at present, in the election campaign, many of my fellow Members are becoming nervous. However, this is tantamount to an accusation of deception, fraud, and unjust enrichment on my part. It is an accusation of a serious criminal offence. Mr Martin defames, denounces and maligns Parliament, its Members, even the officials and, especially, his Austrian colleagues time and again in public with distortions, half-truths and untruths, and the extent of what I can tolerate has been exceeded. I demand the retraction of this accusation, an apology and a condemnation by the Presidency.
(Applause)
President
Thank you, Mr Mölzer. As colleagues will know, the machine was checked last time and it was found that there was no other or inappropriate use of the machine, so the matter has been clarified.
I see that Mr Hans-Peter Martin would like the floor. I give it to you briefly.
(Murmurs of dissent)
Hans-Peter Martin
(DE) Madam President, could you please call for silence in the Chamber?
(Laughter)
Or will I be punished through the withdrawal of my daily subsistence allowance if I dare to call out 'referendum'?
I have the right to make a personal comment under Rule 149. I absolutely reject what my fellow Member has just uttered. I recall what I actually said in plenary in the absence of many of the right wing extremists and the mob behind me. I stand by it. And if I am being accused....
(Protests)
You can hear many other protests here that are so terrible that I do not wish to repeat them in public. But that is what the right wing extremists are like. We know that from history and that is the huge danger that lies ahead of us.
As regards the accusation of the unlawfulness of my action, I would just point out that there may have been various attempts to criminalise me, but never any criminal investigations, not because the Austrian judges or public prosecutors were prejudiced but because they saw how unfounded those allegations were. If the right wing extremists now go on the offensive with such arguments, it is up to the electorate to judge.
(The President cut off the speaker)
President
We have listened to you. I have said that the matter has been clarified. That is enough. Thank you.

Beniamino Donnici
(IT) Madam President, ladies and gentlemen, Madam President, as you are aware but many of my fellow Members are not, due to the extreme lack of information supplied by the Presidency on this matter, which is being kept quiet, the European Court of Justice has finally reached a verdict on the long dispute that has unfortunately seen me oppose the European Parliament and Mr Occhetto.
The Court has overturned the decision taken by this House on 24 May not to confirm my mandate following the proclamation by the national authorities, and the European Parliament has been ordered to pay costs. The intention of the Court's timely decision was to restore Parliament's legitimate composition before the mandate came to an end, but at 5 p.m. on 4 May President Pöttering gave this Chamber a one-sided, ambiguous and confused account of the affair, calling once again on the Committee on Legal Affairs to confirm my powers even though he was well aware that this was only a notation. Not only this, but he also failed to request an extraordinary meeting of the Commission, because this was the final sitting of the parliamentary term, unless he decides to extend my mandate to the next term too.
I therefore call on the Presidency to rectify this further gross mistake by tomorrow in order to comply with the Court of Justice ruling. Madam President, I would have preferred the European Parliament to have been spared this heavy legal defeat, and, in spite of everything, I offer my sincere regards to you and my fellow Members.
President
Thank you, Mr Donnici. Your comments have been noted and, of course, the President did make a statement on Monday afternoon. Your comments will be passed on to the Bureau meeting this afternoon.
