Lamfalussy follow up - Future Structure of Supervision (debate) 
President
The next item is the report by Ieke van den Burg and Daniel Dăianu, on behalf of the Committee on Economic and Monetary Affairs, on Lamfalussy follow-up: future structure of supervision.
Ieke van den Burg
rapporteur. - Mr President, since 2002 I have been dealing with the issue of stability and supervision on the financial markets. Already at that time, in a report for Parliament on prudential supervision, I pleaded for a strong system of European supervision comparable to the European system of central banks.
Thank God we have the euro and the ECB in these turbulent times, but it is all the more embarrassing that we do not have this strong supervisory architecture. At the time I could not get a majority of Parliament behind a revolutionary reform; everyone was speaking about evolution. Nevertheless, when I have spoken over the years with a number of supervisors and other high-level representatives from the industry and supervision, people told me: 'We cannot say this publicly, but you are right that something more has to happen; a real crisis situation will show that this is not sufficient'.
So we needed a crisis to create the sense of urgency. Needless to say, I would have preferred to avoid such a crisis and I wish that we had been better prepared. But the crisis is there now and the tsunami that Mr McCreevy still did not want to look at some weeks ago, when we dealt with the Rasmussen and Lehne reports, is there and it is unprecedentedly heavy, I would say.
I would now expect this momentum to be there, but I am disappointed and embarrassed that what we are doing in the European Union is too little, too late. The whole world is watching but we are not managing to really get a common approach. Even economists and commentators that were the cheerleaders of this wonderful innovative financial engineering that should not be hindered by regulation are almost unanimous in their disappointment at what Europe's leaders have done so far. I could refer to the editorial in yesterday's Financial Times for instance, where they say: 'Thus far, Europe's leaders have displayed a purely declaratory brand of unity, jointly proclaiming that they will each take care of the problems in their own back yards.' So the Financial Times also concluded that we need a conductor and not only solo singers.
Tomorrow I think there is an opportunity for Parliament to show that we not only sing our own arias of regret and anger and play the blame game, but we can make a real contribution constructively to establish leadership and pick up on very concrete proposals that the European Commission could immediately initiate.
It may look quite technical for many other Members of Parliament but I can assure you that these have been well thought through and well prepared by us in the Committee on Economic and Monetary Affairs. It only needs leadership and courage from you, Commissioner, to give the green light and to start up the process. You should not listen too much to the City lobbyists keeping you from doing things, and of course you should listen to experts - but the political responsibility is with you to take these initiatives.
Mr Barroso has already mentioned some short-term measures. I am happy with what he said about a wise persons' group but, here again, this was something that we in Parliament proposed two years ago, and we did not get your support for this. In relation to the CRD proposals, the measures for the credit-rating agencies: it is not quite clear to me what measures you are going to present on the recommendation on executive pay. Here, I hope, you are not listening only to the weak proposals of the Ecofin Council but that you are prepared to move a bit further. Finally, on the supervision: it is not only long-term measures for the wise persons' group; we should already start with something now. Concerning my Amendments 5, 6 and 7: I hope there will be support for a proposal which immediately leads to an independent chair and vice-chair for the European supervisory structure.
Daniel Dăianu
rapporteur. - Mr President, I am going to use this moment just to say a few words on issues which seem to frame the public debate on regulation and supervision.
Firstly, free markets are not synonymous with no regulations. A lax monetary policy can lead to higher inflation and eventually to recession but cannot by itself cause the meltdown of a financial system. The features of the financial system that have brought the threat of collapse are structural traits of the new financial system.
The root cause of this crisis is an inadequately regulated financial system. Mortgages are not toxic per se; badly constructed securities based on them are toxic. The packaging of financial products can bring a lot of opacity to markets. Compensation schemes that make behaviour irresponsible: that is toxic. Misleading models are toxic; extreme leveraging is bad. Not to address these problems would be terribly wrong.
Not all financial innovation is benign. It is baffling therefore to hear that fresh regulation is bad because it would stifle financial innovation.
Building up proper regulation and supervision is not about bringing in socialism. It is about what kind of market economies we want to live in. That may lead to the recreation of elements of state capitalism, I agree, and that is for discussion.
Relying on industry-led initiatives is quite insufficient, for such initiatives frequently serve vested interests.
Why is it that we fail to learn from previous crises? Clearly, vested interests can have a long arm and try to influence regulations and supervision, including the behaviour of people like us.
Do moral values matter? Yes, I believe they do matter. The mess that we are in today is also because some believed that moral values do not matter in business. Regulators and supervisors should understand that there are systemic risks. They should always be alert to financial stability.
Strains and crises cannot be entirely avoided, but we can limit the damage they cause. We need comprehensive answers to crises and genuine coordination among the EU, US and other major financial centres, particularly during bad times.
Charlie McCreevy
Member of the Commission. - Mr President, let me start my remarks with the situation on financial markets. We are in the most serious crisis in living memory. What started as a sub-prime crisis has now moved way beyond this to embrace the whole economy. Fears about the ability to raise financing are creating even greater lack of confidence among all economic actors. Unless there is a rapid unfreezing of lending, we face a continued downward spiral with obvious impact on economic activity. Freeing up lending is the number one priority today. The measures taken by central banks today will be an important contribution to unblocking the flow of lending.
One thing we have seen over the past few weeks is that no economy or financial market is immune from what is taking place.
At ECOFIN yesterday the concern of Finance Ministers was evident. We recognised the need for governments to intervene to shore up the financial markets, whether it be by capital injections, guarantees or other means. There is no silver bullet here. Strong, fast responses are essential.
For its part, the Commission is showing its capacity to respond quickly. I will be bringing to the college next week amendments to the deposit guarantee scheme which will increase the minimum level of protection, as well as requiring Member States to put in place procedures for rapid pay-out.
At Ecofin yesterday it was agreed that Member States would increase the current level to at least EUR 50 000, with many going beyond this to EUR 100 000. This reflects to a degree the differences in average savings in Member States.
In addition, we are urgently putting into place changes to our accounting rules to ensure banks in the EU can avail themselves of the same flexibility that is offered to banks in the United States, namely the option for individual banks, if they wish, to move assets from their trading books to their banking books. This is a comitology measure to which I hope Parliament will be able to give its agreement as a matter of urgency. In the mean time, I would hope that national supervisors would apply these new provisions already so that banks who wish to could avail themselves of this new possibility for their third-quarter results. In addition there is the IASB's acceptance of the US SEC's clarification of the use of fair-value accounting when there is no active market information. This is also highly relevant for banks and should be used for third-quarter reporting.
We are, of course, continuing to work for the rapid implementation of the Ecofin road map to strengthen the European Union's capacity to prevent and manage future financial crises. Overall the implementation of these initiatives is on track.
In times of crisis, politicians need to be seen to do things so as to reassure the public. Things are no different here in Brussels, except that our margin for manoeuvre is more limited. We do not have access to the financial resources that are necessary to combat this crisis. It is central banks and finance ministers who control the purse strings. What we have do is endeavour to maximise a common approach by Member States. There can be no doubt that, by working together, Member States are in a much stronger position to counteract the downward spiral we are currently in. We must continue to assist Member States to work towards common goals and shared approaches. Where we have the tools, we will continue to move forward quickly with any necessary measure.
Turning now to your report on the 'Lamfalussy follow-up and future structure of supervision', I would like to congratulate the Economic and Monetary Affairs Committee - in particular Mrs van den Burg and Mr Dăianu - for their excellent work in producing such a thought-provoking and wide-ranging report. It highlights many of the challenges facing us now in the context of the current financial crisis. Innovative and well-thought-through proposals for regulatory and supervisory reform are crucially needed in the current situation.
You include in your report quite a demanding list of recommendations of where legislative action will be needed. It is heartening to see that so many of the issues you highlight are those that the Commission is also prioritising. In many cases, work is either ongoing or is planned on initiatives corresponding to the recommendations.
Let me mention here some of our most important ongoing initiatives, such as the Solvency II proposal, the proposals for revisions to the Capital Requirements Directive, which was adopted by the college of Commissioners last week, and the legislative proposal on credit-rating agencies, due shortly.
This reflects many of the recommendations put forward in your report.
The proposal for amendments to the Capital Requirements Directive covers critical areas and will fundamentally strengthen the regulatory framework for EU banks and the financial system. I hope you will fully support us on this. Reaching agreement by next April is essential.
Soon we will also go forward with a proposal on credit-rating agencies. The proposal will aim to introduce a legally binding authorisation and robust external oversight regime, whereby European regulators will have to supervise the policies and procedures followed by the credit-rating agencies. The Committee of European Securities Regulators (CESR) will play a strong coordination role.
On the EU supervisory framework, we are working on a revision of the Commission's decisions establishing the three committees of supervisors. By the end of the year, these committees will be assigned specific, practical tasks, such as (i) mediation, (ii) drafting recommendations and guidelines, and (iii) an explicit role to strengthen the analysis and responsiveness to risks to the stability of the EU financial system.
Also, we have now to think about the longer-term vision of European supervision. Current events are showing its limitations today. The European Central Bank's handling of the crisis has been exemplary. We now have to reflect seriously on how our supervisory arrangements for the cross-border financial institutions are constructed. As President Barroso announced earlier, we want to establish a high-level group to work through the various options and make recommendations on how we should proceed.
This takes up the suggestion in your report of a high-level group to tackle European supervisory arrangements.
I have been around here long enough to know that agreement on reforms to supervisory arrangements will not be easy.
But if we do not draw the lessons from the current crisis, then we are doing a great disservice to the European Union. This reflection should not blind us to the necessity to take the pragmatic steps to strengthen supervision that we have put forward in the Solvency II proposal and in the Capital Requirements Directive. Colleges of supervisors are essential.
The time ahead will be fraught. All of us have to take our respective responsibilities. Now is the time for us to show that, by working together, we can confront the challenges. I look forward to the strong support of Parliament in this regard.
Piia-Noora Kauppi
on behalf of the PPE-DE Group. - Mr President, I think it was Mrs Tumpel-Gugerell who said in Nice in mid-September that the worst mistake we made was not to include the financial supervisory architecture into the Maastricht Treaty. We should have dealt with this issue already, together with EMU final phase decisions.
I completely agree with this view, and Mrs Tumpel-Gugerell is definitely not the only one who has said this. But whom are we to blame for the lack of progress on supervisory architecture? I do not think it is the Community soldiers we need to blame - and by Community soldiers I mean the European Commission, which has delivered, and also Parliament: as Mrs van den Burg said, we have been dealing with this issue since the beginning of 2000, and we have made several proposals to the Council, but the Council seems totally reluctant to move.
I still wonder how it was possible to have the Lamfalussy regime in place. Maybe it was the deal between the UK and Germany to offer the CESR location to Paris which finally made the difference, but I think that in Council they have been totally unwilling to move forward on this issue. So now it is the right time; maybe it is too limited and too late, but at least something is also now being done in the Council.
Parliament has made several very important proposals. In order of priority, these three are the most important:
First, the mandatory colleges for all cross-border financial institutions, with legally binding rules on how they operate, how they share information and what kind of decision-making procedures they use.
Second, improved legal status for the Level 3 Committees, and more effective working methods for them too. Maybe on this issue, the Commission could give a little bit more room for manoeuvre to Level 3 Committees, so that they would not only be consultative but also decision-making bodies in the future.
And third, strengthening the role of the ECB in financial stability. The ECB should get more information. It should be linked to CESR and CEOPS and they should work more together.
Finally I want to say something about the transatlantic dialogue. Now is not a good time to put the transatlantic financial services on hold. I know this is not the fault of the Commission but it mainly depends now on US actions, but I think the more you can do to keep that discussion going, the better it is. It is very important for the future...
(The President cut off the speaker.)
Antolín Sánchez Presedo
Mr President, we cannot shut our eyes to this. The current crisis has revealed a lack of supervision and economic governance in the financial markets.
Citizens are very clear that identifying risks and preventing them is much better than correcting them when they have resulted in imbalances and caused damage to the financial markets and to the real economy. The times when a large proportion of these financial markets operated in an opaque, uncontrolled manner, abandoned to the irresponsible games of imprudent or unscrupulous operators need to come to an end.
Free movement of capital, Economic and Monetary Union, the growing complexity in the field of financial services and globalisation demand that we go beyond a national supervisory framework. We need to move towards European supervision. The European Union cannot be absent from and left out of new concepts such as macro supervision, systemic risks, global financial stability, and the need to participate in global economic governance.
We therefore need to move towards European supervision and do so in a decisive way. Not to do so will be a serious strategic error at a time when global power is changing. We will need to overcome inertia in order to break the deadlock on Solvency II, and we will therefore have to rectify and accept an integrated European approach.
In order to ensure consistency and fairness in resolving differences between authorities or between the different financial sectors we need to abandon unilateralism and progress towards a genuinely operational European system. The differences between two authorities cannot be solved through a decision made by only one of them; it is not possible to be both judge and interested party at the same time.
I therefore fervently support the van den Burg and Dǎianu report. I am grateful that my amendments have been taken into consideration and have inspired some of the compromises, and I hope that their most ambitious proposals will triumph. This will be good for our citizens and essential for the financial markets.
Wolf Klinz
Mr President, Commissioner, ladies and gentlemen, at the start of this decade, Baron Lamfalussy presented a report in which he suggested ways in which supervisory authorities in Europe could cooperate better and more intensively. At the time, the Council welcomed these suggestions, but did nothing about them. If the financial crisis that we are currently experiencing has a positive side, then perhaps it is that the topic of improving supervision has moved to the top of the agenda.
It is surprising, however, that it takes a report from the Committee on Economic and Monetary Affairs according to Rule 39 for the Commission to start to tackle this topic seriously. What is certain is that we can face the challenges of an integrated and growing financial market successfully only if supervision develops increasing convergence and becomes increasingly integrated. In the meantime, 58 of the 100 financial conglomerates are now active across borders. That statistic alone shows how much has to be done!
The report by the two rapporteurs points in the right direction. Mrs Kauppi alluded to it: the wide-ranging establishment of colleges to supervise cross-border financial conglomerates; the strengthening of the Level 3 committees. That is fine, but it should also be remembered that the small Member States are often represented in these colleges only as a host country supervisor and that it is therefore important to take proper account of their interests.
In the short and medium term there are probably no other ways to improve the situation; in the medium to long term it will not be enough. We must have a system that earns the right to be called a European supervisor, and this system should align itself with that of the European central banks.
Pierre Jonckheer
on behalf of the Verts/ALE. - (FR) Madam President, Commissioner, I said earlier on behalf of my group that we supported the conclusions of the Ecofin Council. I notice that the stock markets have plummeted again today, and that markets across Europe have gone into freefall. These measures are therefore insufficient.
On the question of responsibility, I agree with Mrs Kauppi on the fact that there has effectively been a great deal of resistance in the Council, but it is clear that the Commission - yourself in particular - has never been a fan, to put it mildly, of more regulation at European level. Your entire tenure has been dominated by this idea of industry self-regulation. This is why we are lagging far behind in terms of European legislation on the topics under discussion today.
In terms of the report that will be put to the vote tomorrow, my group will support all of the amendments tabled, particularly by the rapporteur Mrs van den Burg. From our point of view, these also try to ensure that there will be more binding provisions on securitisation and the mechanisms that hinder speculation. They mean that the Lamfalussy Level 3 Committees are almost a forerunner of this European supervision, of the European supervisor that we want.
This is the direction that we would like to move in, and I believe that the Commission, which has a monopoly on legislative initiative, has failed in its duty during this legislature. From this point of view, grandstanding is all very well, but you have very little time in which to get up to speed.
John Purvis
Madam President, I appreciate the co-rapporteurs' willingness to work towards a consensus on this report. It is still not perfect as far as I am concerned - they will probably be pleased to hear that! - but it is much more appropriate than it was, and I feel we can be justified in supporting it.
I raise two particular points. Securitisation is seen as one of the demons of the current financial crisis, and now it seems to be seen as a necessary solution that we require originators to retain a percentage of their products. The Commission is proposing 5% in its capital adequacy review. We must at the very least have an impact assessment of this idea. I hazard to suggest that the only result will be to clog up the financial markets, and investors may even be tempted to omit full due diligence because of it. What really matters is being able to trace back originators through intermediate repackages and hold them to account for any misrepresentation, negligence or incompetence.
And the second matter is the way of settling disputes or disagreements in the colleges of supervisors. The rapporteurs have suggested a rather complex and formal appeal process with chairmen and vice-chairmen and a new bureaucracy. Surely such situations must be resolved quickly, and we have proposed therefore that the parties to any disagreement which cannot be resolved amicably should agree mutually on a mediator whose decision, at least in our view, should be final.
Lastly, Commissioner, I appreciate the introduction that you gave to your speech on the present crisis and am sorry you were not present during the previous debate with Mr Almunia and Mr Jouyet, when all these matters were represented by the Members of this Parliament, including myself. Maybe you can read through those speeches at great length and give us a response to our points of view.
Sharon Bowles
Madam President, this report is ambitious but also realistic. It analyses the causes of the financial turmoil and proposes future changes. Many of these changes, as others have said, would have been suggested without the present situation, because there was already a view that the Lamfalussy process had not progressed as far as it could or should have done.
So this is about the next generation of supervision, rather than a fix for the current crisis - though we think it will help prevent any similar occurrence, and now there should be more willingness at Member State level to have formal integrated decision-making structures.
But I reiterate that it is important for regulation to be smart. The solution to our current problems, and the calmer future when it arrives, will not take the form of regulatory spam with thousands of compliance tick boxes, which, as we now know, causes it to be pushed off to specialist departments to do the ticking, without proper 'hands-on' at board level.
We should have clear, simple rules. Some, yes, fuller in scope, but rules that do not swamp the big picture, so that those at the top are properly accountable and know what is going on.
Finally, as part of crisis resolution, we need improvements on winding up, but that is not just in crisis situations: we also need to look at cross-border winding up in normal times. Here again we may need to tread on territory that makes Member States uncomfortable, but it has to be faced.
Margarita Starkevičiūt
Madame la Présidente, first of all allow me to disagree with those saying that we are not able to deliver an EU-wide response to the financial crisis. We responded by bold actions at national level where they were needed. Because our national financial markets differ, we have room for manoeuvre in stressful times, taking into account the different level and scope of our financial markets in Member States. In Vilnius we do not have a City, so our actions are different.
Somehow I am not surprised that the Commission proposals are based on the needs of cross-border financial groups; I have been a Member of the European Parliament for five years. What does surprise me is that the Commission cannot figure out that the cross-border group model cannot survive during downturns in the economy. We are witnessing this now. Business leaders have to come up with plans to modernise their model by adding flexibility at subsidiary levels, to reflect the diversity of needs of the real EU economy. The EU supervision and regulation system has to ensure the smooth restructuring of the financial industry. The starting point for reform has to be an answer to the question: 'Which treasury will pay for the bail-out bill in the end?' This is in the interest of the stability of the whole European Union.
However, I would like to ask my colleagues not to forget one small neighbour of the European Union which is closely related to us - Iceland. We have left them on their own.
Olle Schmidt
(SV) Madam President, Europe is now feeling the full brunt of the financial crisis. The decision taken yesterday by Europe's Finance Ministers on a common minimum level for deposit guarantees is an important step, as are the rescue operations being undertaken by individual banks. Today's coordinated interest rate cuts by several central banks are necessary to restore confidence in the financial markets. These measures are targeted and must resolve a crisis here and now.
We decision-makers also need to take responsibility for ensuring that the market functions in the long term. This means that we must adopt a methodical and clear approach when we introduce new legislation so that it also creates good prospects for growth. The importance of impact analyses is no less as a result of the financial crisis; on the contrary they are even more vital now.
The proposals which have been presented here in the Lamfalussy process mean better coordination of European supervision and are an important step towards a better European market. I would like to thank both colleagues, in particular Ieke van den Burg, who has done a magnificent job for many years and has been extremely persistent. That is a good thing in politicians!
The proposals build on already existing systems which must also be improved and made more effective without checking the economy. We must not confuse our responsibility for reacting quickly and managing the crisis with an even greater responsibility - that our rules must work, not only in this crisis period but also for the benefit of Europe's future growth.
Protectionism is never the answer and this is not the end of the global economy.
Avril Doyle
Madam President, I should like to welcome Commissioner McCreevy. I have listened to many colleagues' reaction to the Irish response to our banking confidence crisis and liquidity problems and the follow-through from other countries in the days since, because, having criticised the Irish, they then had to follow on. It is more than ironic that we now debate today the supervisory architecture for financial services in Europe. I do not know if you could call it a happy coincidence or too little, too late.
Would things have been so much different if we had had some sort of supervisory architecture in place, particularly in terms of the rating agencies? It seems to me, when you go back to the first base, that they are really the cause of many of the problems. They allowed the sub-prime crisis to get out of control by continuing to give strong ratings to institutions that had packaged these devious products and sold them on. Hence the problem we have with us today.
Let us be sure that our response reflects cool heads and proper thinking, given the crisis within which we are talking.
Harald Ettl
(DE) Madam President, Commissioner, when, if not now, will it be necessary to improve European supervision? All the omens are clear: there is a need for action and we have something to do here. The provisions for monitoring the stability of the financial markets are critical. We need stricter monitoring regulations for macroeconomic policy and financial market supervision, particularly by the European Central Bank.
Key parameters for making decisions via qualified majority voting in the colleges of supervisors dealing with a cross-border institution in the European authorities are critical. Naturally, we must work on a case-by-case basis when it comes to dealing with and assessing the size of the Member States. A smaller country must not be swamped by a larger country. There needs to be a structure at EU level, backed up by legislation, to run the blockades and resolve conflicts between national and sectoral supervisors. We must make use of all the management options at Level 3 in order to create a better architecture.
Czesław Adam Siekierski
(PL) Madam President, the main reason for the current collapse in the financial sector is the irresponsibility of financial institutions, unsuitable risk management, bad loans and allowing excessive debts to arise without proper guarantees, which has ultimately led to a loss of liquidity. The entire supervision system was also ineffective. It seems that the current solutions are failing to keep pace with the rate of change in global finance. We therefore need to bring them up to date, to soften the potential consequences of further crises in the future. Bearing in mind the current difficult situation in the financial markets, we should give absolute priority to legislative work to establish cohesive and effective means of supervision. At the same time, in recognising the fact of increasing integration and growing dependences between individual financial markets, we need to ensure maximum compatibility between the new European system and the American, Japanese and Chinese systems.
Charlie McCreevy
Member of the Commission. - Madam President, can I briefly respond to a few points made. One relates to the previous debate, referred to by Mr Purvis. I was not invited to the previous debate. I would seldom pass up an opportunity of coming to the European Parliament to hear regular fans of mine on the Left praise my contribution to all things European. I could never miss an opportunity to hear people as eminent as Mr Schulz and Mrs Berès and many others speak about me in such glowing terms, so if I had been invited I would have gladly been here.
Regarding European solutions, I should like to give two examples.
My predecessor initiated an item regarding pay; this was issued in the form of a recommendation, which is possibly the one of the softest instruments that the EU has at its disposal. That was the only chance it had of having anything accepted, because the competence in this regard lies with Member States. We produced a report about a year and a half ago, but only one Member State has implemented most of the recommendations. The others have, by and large, ignored it. The Member State that implemented it - to give credit where credit is due - was Holland. I am not saying it has implemented every exact letter of it, but it is the only Member State that has gone down that particular road.
So a European solution was there. A lot of comment is being made at the present time about the bonus culture and executive remuneration. We tried to come forward with a type of European solution, which was put forward by Mr Bolkestein - I think it was technically me who put it into effect but I give credit to Mr Bolkestein for initiating it. That is what we did, and that is what our report shows.
Secondly, regarding supervision - the main subject of this report - I have spoken on many occasions in the Parliament and elsewhere about the issue of the cross-border supervision of financial institutions. I have spoken at Ecofin and at press conferences. It is practically impossible to move forward on this particular issue because Member States do not want us to have a European solution to this.
However, I should like to point something out to Members of the European Parliament.
Last year I initiated the Solvency II proposal regarding insurance, and advanced the idea of colleges of supervisors, group supervision and group support. Both in the Council of Ministers and in the negotiations with the European Parliament, it has been watered down considerably. If we are to get this directive through in the lifetime of this particular legislature, a lot of heavy lifting will have to be done with the Council of Ministers because there are large divergences, not only on those particular items but on other items as well.
Although I have been in politics for all of my adult life, and have ceased to be amazed at contradictory positions that politicians may adopt - and no doubt, if you look over my long political career, you might find some of them as well - I still find it totally ironic and amazing that, when we advocate a European solution, for example regarding supervision to do with Solvency II, the people who advocate European responses - both Ministers and Members of the European Parliament - are often the same people who come back and lobby for their own national state positions when a particular piece of legislation comes before them.
Those of us who were brought up in the Catholic religion know the prayer of Saint Augustine which says more or less, 'Make me pure, but not just yet'. It is a bit similar here. This does not surprise me because I have been a politician for all of my adult life so I am used to that type of irony, to put it in its politest terms.
Be that as it may, there are only 44 or 45 cross-border financial institutions and we have a supervisory system which is way out of date for such operations.
Finally, may I make this point regarding the current crisis, which I have spoken about here and in other forums including press conferences. There is not one single magic bullet solution to all of this. If there had been, it would have been found long ago. These are unprecedented times and unprecedented responses have been given, both on this side of the Atlantic and in the United States.
Can I just remind Members here - and I am sure President Barroso did so as well in his contribution - that we in the European Commission do our best to coordinate and encourage Member States to give a total response. But, as I said in my opening remarks, these responsibilities lie with Member States, with Member States' central bankers and with Member States' ministries, because they are the elected people. They are the people who are in control of taxpayers' monies and they are the people who must give the responses.
We have attempted - and we have succeeded somewhat - to get a European response in some of these particular areas. May I finally make the point that we must remember the structure of Europe. We are not a federation like the United States. We are not a central government, as found in the 27 Member States, and therefore we can only act to the limit of the powers that are given to us.
Ieke van den Burg
rapporteur. - Madam President, there is a lot of material for debate.
If I may quote the Commissioner on some of the things that he said, I should like to start with his statement that, in times of crisis, politicians should do something.
I think they should do it much earlier. Before a tsunami comes over us, we should take the measures and be proactive and prevent this type of thing from happening. So I agree with what others have said: if we are starting to act now, it is too little, too late.
My second point is this issue of the supervisory steps to be taken. You mentioned the Solvency II example where you also accuse us, Parliament, of weakening these proposals on group supervision. I do not think it is a weakening of the structure that has been proposed, as I think my colleague Mr Sánchez Presedo has mentioned already. What is proposed in fact by the Commission is a system of group supervision where lead supervisors, which often are the big Member States, take the lead in the process of a college.
I support the idea is that we should create colleges and that we should take some of these supervisory issues at a common, joint, level, because these cross-border groups act at the joint level. But the point is that there may be conflict between the interests of these lead supervisors of one national Member State and the supervisors of a host Member State, a big part of whose markets may dominated by this other group.
So in these cases of conflict, it is not fair to just say that you can have a sort of voluntary mediation by the Level 3 Committees followed simply by advice to the lead supervisor, and then in the end the lead supervisor can either comply or explain that he is deviating from this advice.
This is what is worrying the host Member States, and that is why you cannot stick solely to national supervisors dealing with this. There you need a neutral, impartial, independent arbiter at European level, and this is what I have already proposed in this report: not a bureaucratic supervision structure, just something to build on the present structure simply by adding to the other chairs of these three Level 3 Committees an independent chair and an independent vice-chair to act together with these Level 3 Committees and to deal in a binding way with the resolution of conflicts that may remain between supervisors.
This is what I think should be the guarantee to enable host Member States, smaller Member States in particular, to give their assent to this type of group supervision and these mandates to lead supervisors.
So this extra level, the extra add-on that we need to solve this problem, as well as for the short term, is in Amendment 7 that I have tabled for the vote tomorrow.
Another issue is the role of these supervisory committees as compared to the Commission. I also have the impression, like Mrs Kauppi, that in the Commission you would only prefer to have these supervisors as advisors and not really have an independent role for them to play, for instance in the international connection, in connection with the IASB standard-setting board or the FSF.
A direct question to you. We have been told that Mr Barroso was very proud that now the Commission is invited to this financial stability forum, but that although you were invited last week you did not go to that meeting. Maybe you can directly respond to say whether this true or not?
A final thing, on the executive pay recommendation, the only thing you have mentioned is that this is soft law and one Member State is following up on this. There is room to come up with stronger proposals, so please come up with your proposals.
Daniel Dăianu
rapporteur. - Madam President, let me say something which, in my view, has not been properly outlined. Regulation and supervision is not only about the building; it is about the object: what we regulate and supervise - and that is the crux of the matter.
We could have had an independent, EU-wide oversight body regulating in Europe and we would still have experienced the eruption of the crisis, because the problem is that the flaw lies in the financial system, not necessarily in the non-existence of a unique body of oversight and supervision.
Secondly, we are going to experience a very severe recession. We have to recapitalise the banks, and this will cost a huge amount of money. It is going to put tremendous pressure on public budgets, and I am asking myself - because we have to look at the broad picture - what is going to happen. I think that the current crisis shows that the size of the EU budget is nothing when the time comes to intervene and do something, so we have to rethink the EU budget.
(The President cut off the speaker.)
President
The debate is closed.
The vote will take place tomorrow.
Written Statements (Rule 142)
Elisa Ferreira  
In the absence of effective mechanisms at European level, we are witnessing a cascade of often disjointed and even competing emergency financial interventions by various countries.
Action at European level has been reactive, 'a posteriori', seeking to forestall even greater damage. The net result is that the confidence of EU citizens has been dented.
Regulation needs to be thought through in calmer times. Neither citizens, nor we, their elected representatives, can understand the apathy that has greeted Parliament's many specific initiatives.
Now, in the midst of the turbulence, is not the right time to discuss where the responsibility lies.
One thing is certain, however: the rules of the system have to change.
The text that we shall vote on tomorrow is central to better regulation and supervision of the EU's financial markets. It is a proactive response by Parliament and not a reaction to recent events - which unfortunately have just served to confirm its relevance.
Many of those who were politically opposed to a minimum degree of transparency, regulation and supervision of the new financial instruments are now holding their tongues or changing their tune.
We hope the Commission will finally shoulder its responsibilities for initiative, strengthening the soundness of European financial institutions and helping to restore some confidence to citizens.
Cătălin-Ioan Nechifor  
in writing. - (RO) The financial crisis that has extended to almost the entire planet should be analysed at the level of the European Union's institutions. It is inadmissible that the youngest territorial organisation in the world, the European Union, cannot intervene in identifying a solution acceptable to all parties and I insist on creating fast action instruments, as the EC high-level task force is also defined. We presently live in historical, unprecedented times.
We are on the edge of a financial collapse endangering the achievement of the goals undertaken by the EU, both for the 27 Member States and for the other countries on our planet. Any second lost in administrative and bureaucratic proceedings means huge losses for the international banking system and the financial stock exchanges on all continents, as well as the deterioration of the standard of living for all inhabitants. Europe is forced to make a stand and become a standard bearer in the fight for stopping the current financial crisis.
At this moment, we need to prove the functionality of the European system and institutions; we need coordination and cooperation between the Member State governments, the European Commission and the European Parliament. We have the necessary maturity and expertise to intervene in solving a dangerous situation for the future of the European Union, as well as of humankind.
