European Commission plans sanctions for wayward bankers – reports

March 4 2009

By Clive Leviev-Sawyer

The European Commission wants Europe to set up a sanctions regime for banks and bankers that flout industry rules, according to plans to be published on March 4 2009, AFP reported.

The proposal is part of plans for a major shake-up of European supervision of the financial sector based on recent recommendations from an expert panel headed by former IMF director Jacques de Larosiere.

In a media statement on March 4, the EC said that it was calling on EU leaders to further step up co-ordinated European action to fight the economic crisis.

In its communication to the European Council summit on March 19 and 20, the Commission sets out proposals for building on the extensive support already being given to the real economy and to employment.

The Commission’s communication unveils a comprehensive reform of the financial system based on the de Larosiere report.

“It shows how a clear and united commitment to this ambitious programme can pave the way for the EU to give a global lead at the G20 summit in London on April 2,” the EC said.
EC President Jose Manuel Barroso said: “The Spring European Council must send a strong signal to citizens, businesses and the world. Yes, there is a way out of this crisis. Yes, Europe has the unity, the confidence and the determination to win this battle. We must forcefully implement the agreed recovery plan in a coordinated way. We must use the single market to the full.

“Today we are asking EU leaders to agree on a comprehensive action plan. To do everything possible to protect our citizens from unemployment. To clean up financial markets on the basis of the de Larosiere Report. And to pave the way for Europe to lead by example and by persuasion as we approach the G20 summit in London,” Barroso said.

The Commission’s communication begins with an overview of the measures taken since autumn 2008 which have prevented the meltdown of the European banking industry and thus prevented countless bankruptcies and job losses.

It urges member states to act quickly to restore confidence and get bank lending flowing again, in particular by implementing the guidance the Commission issued on February 25 2009 on removing impaired assets from banks’ balance sheets.

“The Commission endorses – and asks EU leaders to endorse – the key principles set out by the de Larosiere Group,” the EC statement said.

The Commission calls for a supervisory system combining much stronger oversight at EU level with maintaining a clear role for national supervisors.

It backs the Group’s proposal to set up an early warning body under ECB auspices to identify and tackle systemic risks.

The Commission supports the Group’s recommendation for a core set of regulatory standards throughout the EU.

In April, the EC will bring forward initiatives already in the pipeline on hedge funds, private equity and remuneration structures.

Following an impact assessment, the Commission will put forward to the June European Council a detailed timetable for further measures based on the de Larosiere report.
It will bring forward proposals in the autumn on the new supervisory framework and on issues including: liquidity risk and excessive leverage; further reinforcing protection for depositors and policy holders; and effective sanctions against wrongdoing.

The communication points to good first results of the European Economic Recovery Plan. The overall fiscal support to the economy from European and national measures and from automatic stabilisers amounts to at least 3.3 per cent of GDP over the 2009-2010 period.

An annexe summarises 500 national measures and concludes that they are broadly in line with the principles that recovery action should be timely, targeted and temporary.

The Commission calls on EU leaders to endorse clear principles for further action, in line with the single market, with open trade worldwide, with building a low carbon economy and with returning to sustainable public finances as soon as possible.

The Commission repeats its call for Member States to agree on the targeted investment of five billion euro in energy interconnections and broadband.

The Commission’s contribution calls for member states to step up efforts to tackle unemployment – which could approach 10 per cent in 2010 for the first time since the 1990s – and social exclusion.

“These efforts will also help maintain demand and prevent further job losses.”  They should be a central plank of national stimulus plans, the EC said.

The Commission invites member states to use measures such as financial support for temporary working-time arrangements, boosting income support for unemployed people, lowering non-wage costs for employers and boosting investment in skills and retraining.

At European level, the EC calls for rapid approval of its proposal to allow an immediate increase of 1.8 billion euro in advance payments under the European Social Fund.

The Commission also sets out a road map towards the European Employment Summit in Prague in May, which should agree on further concrete measures to save jobs and create them in the sectors of the future.

The Commission will organise a series of workshops with all key stakeholders in different member states in the approach to the summit.

The EC asks EU leaders to agree on a number of areas “where Europe can and should give a firm lead” on April 2 at the London G20 summit, building on the success it achieved by speaking with one voice at the Washington Summit in November 2008.

“The EU should make a united push to improve the global financial and regulatory system, focusing on: better transparency and accountability; appropriate regulation of all financial actors; tackling difficulties caused by uncooperative jurisdictions; boosting international supervisory cooperation; and reforming the IMF, Financial Stability Forum and World Bank,” the EC statement said.

“Europe should also promote global recovery by calling for a review of the global impact of fiscal measures taken so far, by promoting open trade and by inviting the London Summit to launch a multilateral initiative on trade finance and to reaffirm the Washington commitment to the Millennium Development Goals,” the EC said.


Indexed List of all Stories in Archives

Published in: on March 6, 2009 at 5:09 am  Comments Off on European Commission plans sanctions for wayward bankers – reports  
Tags: , , , , , , , , , , , , , ,

The do-nothing summit

Nicole Colson reports on the emergency meeting of the heads of the world’s 20 leading economies.

Group of 20 leaders gathered for an official dinner at the White House during an economic summit (Three Trees Images)

Group of 20 leaders gathered for an official dinner at the White House during an economic summit (Three Trees Images)

WORLD LEADERS emerged from the Group of 20 economic summit patting themselves on the back–or in the case of French President Nicolas Sarkozy and George W. Bush, giving each other a celebratory “fist bump”–for coming together to discuss the global economic crisis.

Not that they came up with any real solutions, of course.

Speaking after the meeting, Bush called the agreement negotiated among political leaders from the world’s largest economies “an important first step.” But a closer look at the proposals in question shows that they amount to “too little, too late.”

The general principles included in the G20 declaration include vague calls for strengthening transparency and accountability in financial systems; enhancing sound regulation; promoting “integrity” in financial markets; increasing international cooperation between the countries’ financial regulators; and reforming international financial institutions to include emerging economies.

As National Public Radio’s David Kestenbaum commented:

A lot of the details are “to-be-figured-out-later.”…Oh, the leaders said they thought economic stimulus (building new roads, mailing out checks, that sort of thing) were a good idea. But José Manuel Barroso, president of the European Commission, said each country would have to decide what was right.

In other words, although the G20 summit was portrayed as a coming together of world leaders to take coordinated action to bolster the world economy, the reality is that each country will do what it’s already been doing–use the power of its own state to boost its national corporations and financial systems, at the expense of other countries, particularly poor and developing ones.

That fact was underscored by the announcement that the group isn’t scheduled to meet again until April 30, 2009–more than 100 days after Barack Obama is sworn into office.

“Though the countries’ stimulus packages were cast as ambitious steps, they mainly reflected measures that the countries were already undertaking to respond to the crisis,” the New York Times reported.

“What remains to be seen is whether, working with a new White House, the leaders will cast aside their political and economic differences to embrace more radical changes, including far-reaching but fiercely debated proposals to overhaul regulation.”

– – – – – – – – – – – – – – – –

BEHIND THE scenes, even coming up with an agreement on these relatively toothless “principles” was nearly impossible, according to reports. Unsurprisingly, the U.S. seems to have dug in its heels the most at every suggestion of greater oversight and regulation.

Even mainstream economists rejected the idea that the summit achieved anything substantial. “This is plain-vanilla stuff they could have agreed on without holding a meeting,” Simon Johnson, an economist at the Massachusetts Institute of Technology and a former chief economist of the International Monetary Fund, told the New York Times.

As the Times noted, “despite broad support for economic stimulus, the leaders were not able to agree on a coordinated global effort. The Bush administration, which does not favor a further stimulus, resisted that idea. And the proposal for colleges of supervisors fell short of an international regulatory agency favored by the French. The Bush administration opposes any regulatory agency with cross-border authority.”

The U.S. also made sure that the G20 declaration is explicit in being committed to free-market orthodoxy.

“We recognize that these reforms will only be successful if grounded in a commitment to free-market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems,” the declaration proclaims. “These principles are essential to economic growth and prosperity and have lifted millions out of poverty, and have significantly raised the global standard of living.”

But it is “free-market principles”–specifically wholesale deregulation–that caused the crisis in the first place.

And as global justice campaigners Damien Millet and Eric Toussaint noted following the summit, under the framework of the G20 agreement, the world’s poorest will be the ones who suffer–particularly if discredited institutions like the International Monetary Fund (IMF) and World Bank (WB) gain a new lease on life.

Millet and Toussaint called the summit:

a dismal failure…a sorry show, a script that lacks any credibility, but few spectators seem to care. In detective films, it is seldom the case that the keys to the Court of Justice be given to arch-criminals. Yet this is what the G20 summit is planning to do…This G20 summit shows that lessons have not been learned. The old demons of the past are still with us.

The IMF and the WB, though further delegitimized by the failure of the measures they have enforced for 25 years and by the governance crisis they have experienced over the last years…are still at the heart of the proposed solutions. [World Trade Organization] negotiations aiming at even more economic deregulation, while we have just witnessed the utter failure of this policy, are again on the agenda.

While IMF loans could no longer find clients, Hungary, Ukraine and Pakistan have volunteered. Contrary to denials by concerned institutions, the same intolerable conditionalities are still the order of the day: as counterpart for the latest loan, Hungary had to decide, among other things, to suppress civil servants’ 13th month bonus and freeze their salaries. Japan even proposed to supply the IMF with $100 billion so that it could increase its loans and carry on its fateful activities.

Moreover, the meeting that was intended to find a global solution to the current crisis was not held in the context of the United Nations but in the limited context of the G20. So the very promoters of an unfair and unsustainable model are asked to rescue this model.

The only solutions that were put forward protect the interests of major creditors. Populations and poor countries as usual were not consulted.

When faced with such an inconsistent and ill-conceived script, one cannot but hope for a final twist that would introduce a measure of justice and ethics into all this. This final twist can only be found in social struggles all over the world to bring about a radical change in economic choices.

And if the film should end as dismally as it started, there is a strong chance that the audience will be highly dissatisfied and make it known to the 20 directors in the most vehement manner.

– – – – – – – – – – – – – – – –

EVEN NEOLIBERAL writer Thomas Friedman had to admit in his New York Times column that the financial crisis is far from over:

Governments are having a problem arresting this deflationary downward spiral–maybe because this financial crisis combines four chemicals we have never seen combined to this degree before, and we don’t fully grasp how damaging their interactions have been, and may still be,” he wrote.

Those chemicals are:

1) massive leverage–by everyone from consumers who bought houses for nothing down to hedge funds that were betting $30 for every $1 they had in cash;

2) a world economy that is so much more intertwined than people realized, which is exemplified by British police departments that are financially strapped today because they put their savings in online Icelandic banks–to get a little better yield–that have gone bust;

3) globally intertwined financial instruments that are so complex that most of the CEOs dealing with them did not and do not understand how they work–especially on the downside;

4) a financial crisis that started in America with our toxic mortgages.

When a crisis starts in Mexico or Thailand, we can protect ourselves; when it starts in America, no one can. You put this much leverage together with this much global integration with this much complexity and start the crisis in America and you have a very explosive situation.

“If you want to know where we are right now,” Friedman concluded, “rent the movie Jaws. We’re at that moment when Roy Scheider first sets eyes on the Great White Shark and comes back and says to the skipper, with eyes wide with fear: ‘You’re gonna need a bigger boat.'”


So the bottom line is they had a really great party, at our expense.

They accomplished nothing and want to continue on the road that caused the Crisis in the first place.

Geniuses I tell you, they think they are Geniuses.

So they want to continue to help the planet on a downward spiral to purgatory.

In other wards they may not know what they are doing.  Not that I am cynical or anything.

Being so intertwined is not a good thing. The domino affect is costing we the taxpayers a fortune.

De-regulation is not the way to go. We have been there done that and we have the trillion dollar tee shirts to show for it.  So all we get is a stupid tee shirt.

I wonder what they are giving themselves, a raise in pay?

Someone should be checking their portfolios.

Sommet de la Francophonie in Canada

Harper welcomes Sarkozy ahead of talks on economy

Oct. 17 2008

Prime Minister Stephen Harper welcomed French President Nicolas Sarkozy in Quebec City Friday ahead of a working lunch where the leaders will discuss the economy and trade issues.

Sarkozy and Jose Manuel Barroso, the president of the European Commission, landed in Quebec City Friday morning and were greeted by Harper on the tarmac.

Harper has vowed to make sure Canadian banks are not negatively impacted by ongoing rescue efforts in Europe and the U.S., where governments are providing aid to financial institutions.

“The French president is the chairman of the EU commission on this whole issue right now so he’s trying to drum up support for different ideas on how to protect banks and the financial sector internationally,” CTV’s Rosemary Thompson said Friday from Quebec City.

The leaders are also expected to discuss a possible free trade deal between Canada and the EU.

“Obviously, the United States has always been our main trading partner but if we can do more with India, China and Asia and if we can do more with the European Union that would help to diversify the Canadian economy,” Environment Minister John Baird told CTV’s Canada AM on Friday.

According to The Globe and Mail, the discussions will focus on the free trade of services, rather than manufactured goods and agriculture, between Canada and France.

The Globe cites a French-language draft version of a joint-statement that says both countries are ready to take steps this year to ensure “operational launch of negotiations as soon as possible in 2009.”

The plan may include an “open skies” agreement for airlines, which would allow airlines from either country to have expanded rights to fly routes in the other’s jurisdiction, says The Globe.

Thompson said a labour mobility agreement between France and Quebec may also be negotiated today.

As part of the deal, Quebec and France would recognize 12 different trades and professions.

“For instance, if you were a doctor in France you could come and work in Quebec as a doctor and there wouldn’t be a hassle over credentials,” Thompson told CTV Newsnet from Quebec City.

After his meeting with Harper, Sarkozy will then deliver an address to the National Assembly in Quebec at 3 p.m.

“Apparently he’s going to take a very balanced approach today saying that he loves Canada but that, of course, Quebec is like a brother to France,” Thompson said.

In the evening, Sarkozy will attend the official opening of the summit of La Francophonie, an organization of 55 French-speaking nations.

However, the French leader has cut short his visit and will not attend the closing ceremonies of the summit — a first for any French president.

Instead, Sarkozy will travel to Camp David in Maryland on Saturday for meetings with U.S. President George Bush.

“It’s a bit disappointing,” Christine St-Pierre, Quebec’s minister responsible for the provincial language law, said Thursday.

Quebec Premier Jean Charest said the shortened visit was understandable given the “extraordinary circumstances.”

Sarkozy’s wife, Carla Bruni-Sarkozy, will not be travelling with her husband.


CTV Newsnet: Leaders speak to media in Quebec  document.write(format_clip_duration(’00:15:12.00′)); // see common.js 15:12
CTV Montreal: John Grant reports from Quebec City and discusses Sarkozy’s plan to reform capitalism  document.write(format_clip_duration(’00:02:36.00′)); // see common.js 2:36
CTV Newsnet: Rosemary Thompson on the discussions expected at the Summit  document.write(format_clip_duration(’00:03:07.00′)); // see common.js 3:07
CTV Newsnet: Prime Minister Stephen Harper meets French President Nicolas Sarkozy in Quebec City  document.write(format_clip_duration(’00:03:52.00′)); // see common.js 3:52

EU leaders tear up rules of Eurozone

By John Lichfield in Paris
October 6, 2008

Public spending curbs and rules against state subsidies will be thrown – temporarily – out of the window to rescue European banks from the abyss of the global financial crisis, EU leaders agreed at the weekend. Leaders of the four largest European Union economies – Britain, France, Germany and Italy – came up with no EU-wide magic formula, or rescue package, to defend the buckling European financial system.

They did agree, however, that national governments should be at liberty to take drastic action to shore up their own financial institutions, busting EU limits on national budgets and flouting European rules against public subsidies if necessary. Meeting in Paris, the Big Four insisted that national governments must “consult” their European partners before taking action which could harm rival banks in other countries. This was a rebuke to Ireland’s decision last week to guarantee all bank savings for two years but also, implicitly, a recognition that other nations may have to take similar action.

But they accepted that the rules of the Stability and Growth Pact – the eurozone rules requiring that national budget deficits should be progressively reduced to zero – should be relaxed. This was a silver lining in the crisis for the French government. Even before the financial meltdown, Paris had been struggling to meet its commitment to balance its budget by 2012.

EU laws forbidding state subsidies to private companies would also be “applied in a flexible manner” (ie suspended), the summit decided. At France’s insistence it was agreed that there should be “punishments”, not golden parachutes, for the bosses of financial institutions which needed state bailouts.

The Big Four also called for urgent action to change EU accounting rules which are accused of deepening the crisis by encouraging stock-market speculation against banks.

The decision by the Big Four was portrayed by French officials as a significant lurch away from the free-market doctrine which has dominated EU economic policy for the past two decades.

French officials nevertheless claimed the summit as a victory for the can-do and interventionist instincts of the French President, Nicolas Sarkozy. The four leaders signed a declaration backing his plan for an emergency global economic summit next month to “rebuild the world’s financial system”. Previously, international reaction to this idea had been lukewarm at best.

The mini-summit also agreed a plan by Mr Brown to create a €12bn (£9.3bn) – and potentially €24bn – EU fund to aid small businesses.


Published in: on October 7, 2008 at 8:50 pm  Comments Off on EU leaders tear up rules of Eurozone  
Tags: , , , ,