Credit Rating Agencies - Reporting and documentation requirements in the case of merger and divisions - Insurance and reinsurance (Solvency II) (recast) (debate)
President
The next item is the joint debate on:
the report by Mr Gauzès, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a regulation of the European Parliament and of the Council on Credit Rating Agencies - C6-0397/2008 -,
the report by Mrs Weber, on behalf of the Committee on Legal Affairs, on the proposal for a directive of the European Parliament and of the Council amending Council Directives 77/91/EEC, 78/855/EEC and 82/891/EEC and Directive 2005/56/EC as regards reporting and documentation requirements in the case of merger and divisions - C6-0330/2008 -, and
the report by Mr Skinner, on behalf of the Committee on Economic and Monetary Affairs, on the amended proposal for a directive of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (recast) - C6-0231/2007 -.
Jean-Paul Gauzès
Madam President, Commissioner, ladies and gentlemen, the report on rating agencies with which I have been entrusted has been particularly interesting to draft, and I am delighted, above all, that we have been able to reach an agreement with the Council and with the Commission so that this report has a chance of being adopted at first reading.
Analysing the various causes of the financial crisis has shown that there was an urgent need to enact legislation on rating agencies. The proposal for a regulation submitted by the Commission has been examined very carefully by Parliament in order to ensure that European legislation is at once exemplary, effective and pragmatic.
The recent conclusions of the G20 have further strengthened this determination. The compromise reached by the Commission, the EU Presidency and Parliament adheres to the guidelines sought by Parliament on the essential points of this regulation: the scope, the ratings of third countries, and the prevention of conflicts of interest.
Above all, however, I am delighted that this text has been able to lay the foundations for European supervision in the spirit of the findings of the de Larosière group's report. Indeed, Parliament has kept to the idea that the CESR should be the single point of entry for the registration of agencies. We knew that, given the current state of the law, there was not much more that could be done, but by acting in this way we have laid the foundations for this future European supervision.
Over the coming months the Commission will propose a legislative initiative that will enable the guidelines of the de Larosière report to be implemented, so as to create European supervision that is effective and coordinated.
As a stop-gap measure, and in anticipation of the Commission's legislative initiative, the regulation will be overseen under the coordination of the CESR by a college made up of representatives of the competent authorities of the Member States, the legal force of the decisions being guaranteed by the competent authority of the place in which the agency is registered.
I should like today to point out how appreciative Parliament was, during the second stage of negotiations, of the very constructive and very cooperative attitude of the Czech Presidency. This has meant that, through intelligent discussion, we have been able to develop a number of rules that should make it possible to guarantee this necessary transparency and to remedy the problems and the shortcomings that have resulted from the absence of legislation on rating agencies.
This result is therefore most satisfactory, and for this reason a global amendment reproducing the text on which the Commission, Parliament and the Czech Presidency - that is to say the Member States - have come to an agreement will be presented tomorrow to Parliament.
I believe that in this way the European Parliament, the Commission and the Presidency will have proved that, when faced with a crisis on an unprecedented scale, the European institutions were very resourceful. I hope that, in the same spirit, we will be able to adopt the other provisions of this financial package, and in particular the recast of the Directive on the capital requirements of banks, also referred to as Basel II.
During this period in which Europeans are questioning Europe's effectiveness, it seems vital to me that we be able to prove that Europe is capable of tackling the crisis.
Renate Weber
rapporteur. - (RO) I believe that we are now at a time when we must do as much as we can to keep alive commercial companies in Europe and, in particular, find those incentives to make successful businesses capable of providing as many jobs as possible. Such an initiative is all the more important now during the period of crisis we are going through. I welcome the Commission's proposal for a directive to simplify the reporting procedures in the case of mergers and divisions because its objective is to cut European companies' administrative costs by 25% by 2012, the precise aim being to boost their competitiveness.
The report which we have drafted and which we will vote on tomorrow reflects the Commission's thinking and is guided in particular by the following few factors. Firstly, the reporting obligations in the case of mergers and divisions must be reduced so as to offer Member States and companies greater flexibility in deciding which reports they really need on a case-by-case basis. At the same time, provisions resulting at the moment in double reporting, thereby incurring unnecessary costs, must be removed. Thirdly, the rules on publishing and providing information must be adapted to the new realities involving the use of the Internet so that we make full use of these new means of communication, while also conveying a message about protecting the environment. We must not forget either that the measures stipulated by the directives currently in force on providing information to shareholders were thought up 30 years ago and have never been adapted for the current technological options available. I would like to sincerely thank the shadow rapporteurs for the close cooperation we have had with them and for their support throughout this process of drafting the report. I would also like to thank the representatives of the Council and Commission for making themselves available and approachable over these recent months.
On 7 April COREPER reached an agreement on the entire compromise package negotiated with Parliament with the aim of adopting a directive on mergers and divisions at first reading. We would like this to happen, which is precisely the reason why many amendments have been submitted for tomorrow's plenary session vote, by adopting the compromise which we reached during the informal trialogue. Issues which were of major concern to some Member States, such as publication in local newspapers or the provision of hard copies and the use of the Internet were resolved, and the representatives of the political groups have given their consent to these amendments. With regard to publishing information in local newspapers, this practice will still be possible in those Member States which will consider this to be necessary. Regarding hard copies, the rule is that they will no longer be necessary if shareholders have the opportunity to download and print the documents, but Member States can arrange for commercial companies to provide these documents at their office for consultation.
Another important compromise relates to the date of the directive's implementation, which will be 30 June 2011, as specified in the Commission's proposal. Member States will also have the opportunity to decide what the consequences will be in the event of temporary disruption to Internet access as a result of technical problems. A substantial amendment relates to simplified mergers and divisions, when general meetings will no longer be required to approve them. Based on applying these simplified procedures alone, it is estimated that savings of around EUR 154 million will be made every year, which makes it worth us adopting this directive at first reading.
Peter Skinner
rapporteur. - Madam President, you caught me slightly unawares as I had not seen the complete change of the timetable today, but I am very grateful for the chance to address the Chamber about a very important issue of the financial services industry, that is, the insurance and reinsurance industry, what we have done with the Solvency II report and how we have finally brought this now to Parliament in order to be able to establish what I think will be a very concrete basis for regulation across the European Union.
It is, of course, something which we are coming back to. There was Solvency I, and I am grateful to Mr Ettl when previously in Parliament we discussed this at some length and we managed to come up with some basis. But now we have to modernise, and the insurance industry is amongst many financial services industries which have to be at the forefront of change. It is clear, with the financial crisis and everything that has gone along with it, that the insurance industry is something which cannot be left alone.
There are several measures which come about from Solvency II which I think have helped to make this one of the leading reports, which will be a global leader at that. Amongst them is the issue of management of risk. I think it is not enough now that regulators simply tick boxes to establish whether or not the industry that they are meant to be guarding and protecting on behalf of the consumer is doing the right thing. It is essential that the day-to-day business of insurance and reinsurance companies is actually watched, managed and monitored by regulators over a period of time.
It is by this process and this process alone that we will be able to establish a proper and appropriate form of regulation. It is the reporting of companies: yes, they will be doing things to tell regulators what they are doing, but regulators will have to be involved. And across 27 Member States: not each individual Member State with their own separate rules now, considering what they can apply in terms of that regulation, but indeed they will be applying a standard formula of regulation across the European Union, which will lead, frankly, to the better consumer platform of protection that we expect.
Similarly, companies will manage to get economies of scale from this regulation, because now they will be reporting only in one way to each of the regulators. What they produce, what they have to say, what they do and how they report, will not just be to one regulator but it could be to a college of regulators, especially for groups, because, as insurance companies cross borders, it is now important that regulators team up and work together to ensure that the appropriate levels of reporting, the appropriate levels of figures and what information is supplied, are brought to bear to make sure that the markets are best protected.
It was during the discussion with the Council that Parliament saw some interesting and perhaps sometimes even deliberate ploys to move national industries one way or another, so I cannot pretend that this has not been a very difficult dossier to try to negotiate with the Council: it has. Parliament has pushed the Council a long way. It pushed it further than I think the Council established and really wanted to go under the last two presidencies, so I am very proud and pleased to have worked with the team that I have in order to be able to get the Council to move.
Unfortunately we will not have the kind of group support that we initially envisaged that we should, but because we are able to insert a review clause in this directive, we will be able to come back to group support and, three years after the introduction of this particular directive, I am hoping - and I expect the Commissioner to tell me that he will anticipate doing this as well - to be able to bring back group support in one way or another, specifically to match the economic side of this particular approach.
We want a regulation that is risk-based and principle-based, but one that will also support the capacity of the industry and one that will promote the very best instincts of regulators across the European Union and abroad. I will just finish on this one note. We must also challenge regulators elsewhere in the world and recognise country-to-country regimes only. I hope the Commissioner will agree with me about that.
Charlie McCreevy
Member of the Commission. - Madam President, today's debate takes place at a time when we are facing the greatest challenge to the European economy in modern times. Action is needed urgently: vigorous, targeted and comprehensive action in order to restore confidence, growth and jobs and to repair the financial system, to rebuild stability for the future, to promote trade and investment and to better protect our citizens - in short, to deliver an effective and stable financial system.
Based on the Commission's communication of the beginning of March, the Spring European Council set out a strong EU action plan for the future - a strategy to address the regulatory gaps in the financial sector, to restore incentives and to reform supervision to match the single EU financial market. In a few weeks' time the Commission will present its views on the road towards building a state-of-the-art supervisory framework in Europe. These will be discussed by the heads of state or government in June. The Commission is ready to put concrete measures on the table in the autumn.
Clearly, global problems also require global solutions. The EU initiative to agree a coordinated global response to the financial crisis has been very successful. At the London meeting, G20 leaders made extensive commitments to address the weak points of the financial system in a coordinated manner, to jointly build a new financial architecture while defending an open, global economy.
The situation in the EU financial sector is serious. But a lot has already been done, and I am glad to note that the Commission, the European Parliament and the Council have reacted quickly and cooperated closely to respond to the crisis. We are about to successfully conclude the adoption of three key measures: firstly, the regulation on credit-rating agencies; secondly, the recast of Solvency II, as well as, thirdly, the revision of the Third and Sixth Company Law Directives on domestic mergers and divisions.
Firstly, the agreement reached on a regulation on credit-rating agencies will help address one of the problems that contributed to this crisis and thus will offer some prospect of restoring market confidence. The proposal adopted by the Commission last November sets some clear objectives for improving integrity, transparency, responsibility and good governance of the credit-rating agencies. The thrust of the initial proposal is preserved in this regulation, which will in particular secure the analytical independence of credit-rating agencies, the integrity of the rating process and an adequate management of conflicts of interest that existed before in the rating process. Moreover, a comprehensive supervisory regime will be put in place. European regulators will supervise the conduct of credit-rating agencies and take enforcement action where necessary.
On the issue of supervision, I have been vocal about the need to strengthen supervisory cooperation. I have therefore no difficulty in agreeing on the need to push forward in this crucial domain. Therefore, in order to ensure consistency and coherence in all relevant financial sector regulation, the Commission agrees, on the basis of the recommendations of the de Larosière report, to examine the need to strengthen the provisions of this regulation with regard to supervisory architecture.
On the issue of the treatment of credit ratings issued in third countries, the outcome of the G20 summit has changed the global situation. All G20 members have agreed on regulating credit-rating agencies through the introduction of mandatory registration and oversight regime. That is why I agree with the solution agreed in the negotiations between the Council and Parliament on the treatment of ratings issued in third countries.
I am pleased to note that the ambitious goals set by the Commission proposal have been kept. The Commission is very pleased with the outcome of the codecision process.
Let me now turn to Solvency II. I would like to thank the rapporteur, Mr Skinner, and Parliament for their work and their willingness to compromise in order to reach agreement in a single reading on this important subject. Such an outcome will be widely welcomed by the EU insurance industry, by supervisors and by stakeholders in general.
However, I also have to admit that I am disappointed with certain aspects of the compromise. The deletion of the group support regime, which I consider one of the most innovative aspects of the Commission's proposal, means that we will not be able to modernise - as much as we wanted - the supervisory arrangements for insurers and reinsurers operating on a cross-border basis.
I also remain concerned that some of the amendments regarding the treatment of equity risk could result in the introduction of an imprudent regime for investment in risk-based capital. This is particularly the case for the amendments which introduce the so-called duration approach as a Member State option. The Commission will pay close attention to ensure that the implementing measures brought forward in this regard are prudentially sound.
Nonetheless, the Commission will support the agreement between Parliament and the Council, if it is endorsed by your vote. The current Solvency regime is over 30 years old. Solvency II will introduce an economic risk-based regime that will deepen integration of the EU insurance market, enhance policyholder protection and increase the competitiveness of EU insurers.
As confirmed recently by CEIOPS in their report on lessons learned from the financial crisis, we need Solvency II more than ever as a first response to the present financial crisis. We need regulation that requires companies to properly manage their risks, that increases transparency and that ensures that supervisory authorities cooperate and coordinate their activities more effectively. Solvency II will bring about a regime for the insurance industry that can serve as a model for similar reforms internationally.
The introduction of a review clause specifically mentioning the group support regime will enable the Commission to come back to this issue. I expect that progress in a number of different areas, connected to the recommendations of the de Larosière report, will have created a more favourable environment for reforms related to cross-border cooperation between home and host supervisors.
I now turn to the Weber report. Thanks to the efficient work of the rapporteur, Ms Weber, it has been possible to identify a compromise on simplified reporting and documentation requirements, in the case of mergers and divisions of public limited liability companies which will maintain a very significant part of the savings potential of the original Commission proposal, which amounts to EUR 172 million per year.
Measurements and studies carried out in the context of reduction of administrative burdens show that company law is one of the most burdensome areas of the EU acquis. For several reasons, administrative burdens hit SMEs harder than bigger companies. An expert report from 2007 estimates that small enterprises spend 10 times the amount that large enterprises have to spend in order to comply with information obligations imposed by legislation. Ten times, I repeat. At the same time, small businesses are the backbone of our European economy, and they are currently facing very difficult economic times.
In the current difficult and challenging economic situation we cannot afford such impediments. Instead we must strengthen our effort to ease the burden on our companies. In its resolution of 12 December 2007, the European Parliament welcomed the Commission's determination to reach the goal of a 25% reduction in administrative burdens on undertakings at EU and national level by 2012 and underlined that it would examine legislative proposals in this light. Today, only seven months after the proposal was put forward by the Commission, I am very pleased with this compromise, even though the Commission had gone even further in its original proposal. I look forward to Parliament endorsing this compromise, which will rapidly bring significant benefits to companies, especially to SMEs. And we should not stop there. Simplification and reducing red tape will remain at the heart of the Commission's agenda.
Gay Mitchell
rapporteur for the opinion of the Committee on Economic and Monetary Affairs. - Madam President, I do not want to aim this at anybody in particular. I think that Solvency II, regulation and CRAs are all very relevant and very important, but we need to build a fire station as well as douse the flames. I think we have got too much into the detail of saying: oh, we are going to build this fire station at some time in the future.
I cannot believe that, if President Sarkozy were still President of the European Council, we would still be going at the snail's pace we are going at. The Czech Presidency is a great disappointment, and the President of the Czech Republic in particular is a great disappointment.
I would say to you that if the Czech Presidency, or its successors, is not capable of doing the job, then it shows that we really do need Lisbon: we really do need somebody on a more permanent basis to give leadership to the European Union.
People are looking for hope; they are looking for some information about recovery. Does anybody in this House really believe that, if Jacques Delors were President of the Commission, we would be going at this snail's pace? It is time for action and for leadership, and we are not getting that action or leadership, and that is an issue that needs to be raised here this morning.
The European Investment Bank could do much more. The European Union and its institutions, together with countries like China, could do much more. This is not 1937. We did not have the institutions or the capability of addressing things that we have now. We do have those institutions now, within and outside the European Union - a small number of institutions that can cooperate together. What we are missing is leadership. Bring back President Sarkozy, or somebody like Sarkozy, and let us get the Commission properly led, to give people hope and let us start talking about that recovery. I do not see this coming from the European Council and it is time it did.
Sharon Bowles
rapporteur for the opinion of the Committee on Legal Affairs. - Madam President, I welcome the agreement for Solvency II and, like others, I regret the relegation of group support to a future review and the eventual inability on the part of the Council to explore with us ways to make it workable, taking into account some well founded concerns. In both the Committee on Legal Affairs and the Committee on Economic and Monetary Affairs I looked at what happens to the movement of capital at times of group stress, such as near-insolvency, and it is certainly not as straightforward as the Commission draft or insurance industry representatives portrayed.
However, there are instruments available that could achieve the objective and we recommended Level 2 measures, but now we are left to look for the future for ways to maximise safe, economic use of capital in a group. I hope that Member States will rise to the challenge when it comes to looking for better solutions on winding-up.
Turning now to some of the things in the package, changes to Article 27 specified that supervisory authorities must have relevant expertise and capacity. I made the original amendment in part with the report on Equitable Life in mind, but in the context of the financial crisis it has a wider resonance and I have achieved similar inclusions in the capital requirements and credit-rating proposals.
It must be absolutely clear that taking a risk-based approach is not a soft option. Proper understanding of models and underlying assumptions should be a more intensive way of supervising than tick-boxes. Stress tests must challenge beyond the comfort zone of assumptions, and correlation factors should remain under active review.
Group supervision is now made an inclusive process, not winner-takes-all for the group supervisor, although there has to be responsibility at a single end point ultimately. The role of CEIOPS is augmented, and it is worth stressing that it was the discussion around Solvency II that led the way towards mainstream thinking on enhanced roles for the Level 3 committees. Importantly, it is also clarified that there should not be conflicts between the mandate of a national supervisor and its role within CEIOPS.
These amendments were somewhat prescient when made quite some time ago, but have shown their worth as the financial crisis has developed. As the rapporteur has said, the Parliament team has done well and in the context of Solvency II; so has the Czech Presidency.
Karsten Friedrich Hoppenstedt
Madam President, Commissioner, ladies and gentlemen, the rapporteur has already pointed out both the aspects worthy of criticism and the positive aspects of the result achieved on Solvency II. I believe we can say that it represents significant progress towards rendering the European insurance industry workable in future, even in times of crisis. I also believe that, as has already been said, we have made clear where the aspects worthy of criticism lie, namely in group supervision. There is, of course, more work to be done in the combined area of group supervision and group support. In a crisis, however, when capital flows are not as would normally be expected, it is natural that there is a need to catch up in this field and also to show consideration for countries experiencing difficulties.
We have also discussed another issue that is crucial, since there are 500 million consumers in the European Union, who are also all insured persons, with 'equity risk'. Industry, the economy and the Member States also all have clear opinions on the subject. We have had to accept a compromise on this, which may also be reflected in the analysis at some stage under a review-clause system. The important thing is that we can say that the European Union has sent out a signal in this regard that Europe is on the move, that it is capable of action. I believe that the United States, China and the other countries working on these prudential issues and preparing better systems for the future in these particular circumstances have also recognised this signal. That is one of the important insights.
I should also like to reiterate the following very clearly with regard to the past. Four presidencies have been involved, including the current one. The negotiations have varied widely, naturally also under the influence of pressure from the respective Member States, but we have achieved a result. That is one insight.
The second is that we have worked together with the European insurance industry, and that the impact studies on the individual fields were very important in this regard. Why was that? It was because of the need to involve the insurance industry in finding a path to this solution in view of the very complicated system and subject matter. If we consider that 1 400 undertakings took part in the last impact study - both large and small, as the aim is not market clearance but to involve all actors in the interests of consumers - then this has been a great success. Together with the Solvency II negotiating team, we have refused to be intimidated by any particular sources of pressure, and instead have steered a clear course in the interests of consumers, of the insurance industry and, above all, of course, of our parliamentary duties.
Gianni Pittella
on behalf of the PSE Group. - (IT) Madam President, ladies and gentlemen, I think it is clear to everyone that a cycle of development is over, a cycle that in recent years brought to light the imbalances and contradictions of a certain way of understanding globalisation: an ultraliberal globalisation that in too many cases has benefited from the weakness of the institutions and has looked on politics as a hindrance, an annoyance of which to rid itself.
It now falls precisely to politics to restore citizens' faith in light of the severe economic crisis we are experiencing. In order to do so politics must take the lead, indicating the future prospects and obstacles to be overcome. We must redress the contradiction between the rapid growth of the world market and the weakness of the institutions capable of counterbalancing and controlling the excessive power of the financial economy.
The rating agencies regulation represents an important step forward in this sense. I have worked on this dossier as the shadow rapporteur for the Socialist Group in the European Parliament, in full cooperation with JeanPaul Gauzès, the report's author, whom I sincerely congratulate.
The most significant points of the regulation are the product of Parliament's commitment during the difficult negotiations with the Council. I refer to solid achievements such as the requirement for agencies to register on European territory, forecasting and civil liability, the dual security system for the approval of notes from third countries and above all the possibility that this regulation may enter into force quickly and not after two years, as initially requested by national governments.
The regulation also has a strong symbolic value, however. We are in fact regulating a sector that like others - I am thinking for example of speculative funds - has benefited in recent years from a total legislative void. The outcome of this kind of self-regulation is clear for all to see, and it is terrible. Now is the time to take courage and build a new structure for the financial markets. We must be aware that in this sector, even more than in others, Commissioner, it is not enough for national governments to act alone!
For this reason, I feel a pang of regret despite the excellent result obtained, because an opportunity was missed; due to opposition from the Member States - for which the Council has a serious responsibility - the will was not there to make provision in the text for a single, European supervisory body for the ratings sector. An official request for this was made to Parliament, but a lack of political ambition and realism has so far prevented it from finding support. On this point, Parliament continues to demonstrate its ability to look well into the future, and I hope that the national governments will do the same.
Wolf Klinz
Madam President, the failings of the credit rating agencies that preceded the crisis have made the regulation of these agencies inescapable. The objectives of the present Regulation on the registration of credit rating agencies are, once again, transparency, guaranteed high quality, greater competition, the overcoming of conflicts of interest and, as a result, better protection of investors. Reaching agreement was no easy task. The positions of the Commission, Parliament and the Council started off far apart but, on the whole, these objectives have now largely been achieved. One good thing is that there is to be only one rating category. Categories 1 and 2 for regulatory and other purposes will be a thing of the past. Conflicts of interest have been overcome: there will be no advisory services in addition to credit rating activities. Credit rating agencies from countries outside the European Union will have the opportunity to approach the European market and operate here by means of an equivalence regime involving certification - which is important for small agencies - or by means of the endorsement system - which can be used by large agencies.
The Committee of European Securities Regulators (CESR) will play a crucial role in the registration and supervision of credit rating agencies. For all this, I also note a number of shortcomings in the present dossier and Regulation. I fear that, in practice, the opportunities to enter the European market will be impeded by all the rules and requirements. These requirements are perhaps too restrictive, and they could end up cutting off the European market, and could thus lead to protectionism through the back door - which would be a bad thing. I hope that my fears will prove to be unfounded.
Our rules for internal governance go a very long way - too far, in fact. They are almost overkill. There are no comparable rules in any other EU regulation. We would have done better to define clear principles and leave responsibility for implementing and developing these principles with the undertakings themselves.
Finally, in my opinion, we have not made any progress on putting an end to oligopolies. We shall have to endure many years of very little competition.
Cristiana Muscardini
on behalf of the UEN Group. - (IT) Madam President, ladies and gentlemen, the economic crisis is far from over, although membership of the euro zone has given Europe a certain stability. The International Monetary Fund puts the cost of the financial crisis at USD 4 000 billion, two-thirds of which can be attributed to the banks.
There are many goals to be reached: restoring confidence, supporting growth and protecting employment. This can only be achieved through an economic policy capable of setting the financial system to rights, but Europe does not yet have an economic policy! Despite the London G20 proposals to give a new boost to the credit system, there is still a severe lack of clear rules - as we have been saying for years - to govern the financial market, its operators, the products offered and the derivatives.
The markets should be subject to regulation and surveillance, most importantly for the financial sector, which, uncontrolled, has opened the way for an escalation of unprecedented indebtedness. What to do with this enormous debt that has built up by granting credit without guarantees? Should it be written off? Should it be included in a cleansing mechanism put in place by the banks? Should future transactions in OTC derivatives be banned and the banks asked to put an end to their derivative contracts once and for all?
We need definite responses, new lines of credit for small and medium-sized enterprises and for savers, to prevent uncontrolled relocations and to realign OMC rules to the real situation. If we do not talk about world trade rules we will resolve nothing: that is to say, in the face of this systemic crisis we must reform the system, restoring to politics that steering role that is too often lacking, refocusing attention on the real economy and abandoning the easy opiates of virtual finance!
Alain Lipietz
Madam President, Commissioner, ladies and gentlemen, first of all I should like to state that I fully agree with what Mr Mitchell said in his speech. We are not on schedule; we are not up to speed. Nonetheless I would point out to him that it is important not to make the same mistake regarding the French President that the French sometimes make regarding Mr Brown. Speeches about action do not guarantee that the action will be effective.
In terms of the crisis itself, it is clear that, for us, the crisis did not start with finance. It is rooted in the social and environmental spheres. That being said, it combines with the financial cycle, that is to say that, when the cycle is going well, we take risks, but when it is no longer going well, we tell ourselves that it might be wise to regulate things slightly.
We are at the stage where regulation - and strong regulation at that - is required. Regulation at single market level is required, that is to say that we need far more centralised regulation at European level. This is what guides us in our choice of votes. We fully support the Gauzès report and the progress it makes. For years now we have been calling for more centralised regulation and supervision at European level, and the first stage that has been achieved with the CESR is in our view entirely appropriate.
However, despite Mr Skinner's efforts - and, on this point, our criticism is exactly the same as Mr Mitchell's - we regret that the governments have not understood. We do not agree with the compromise that is proposed and that rejects the system of group supervision. I believe that such a method will lead to further disasters.
We shall therefore vote against the Skinner report - not against the work of Mr Skinner himself, but against the compromise imposed by the governments.
Sahra Wagenknecht
on behalf of the GUE/NGL Group. - (DE) Madam President, ladies and gentlemen, like public security, justice or environmental protection, stability of the financial markets is a public asset and, as such, should be under public scrutiny. After all, we have already seen it happen: anyone who leaves the regulation of financial markets up to the big banks, insurance companies, hedge funds and credit rating agencies in the private sector runs the risk of seeing gigantic sums speculated away in search of maximum returns and, ultimately, the general public having to foot the bill for the losses.
The crisis has shown only too clearly that voluntary self-regulation has failed, yet the Commission has not wavered in its commitment to this. Instead of prohibiting risky finance products and imposing clear rules on the financial sector, it is to continue to allow private actors to decide for themselves what risks to run and how these are to be assessed. We believe this to be irresponsible.
It has now become clear that, in the interests of profit, the credit rating agencies have systematically underestimated the risks of structured finance products and thus really set in motion the trade in unrecoverable loans. The appropriate course of action, therefore, would be to put a complete stop to the outsourcing of risk management to private, profit-oriented actors and to create a European public rating agency to give an independent opinion on the quality of the various securities. The Commission has yet to even consider this solution.
The Gauzès report rightly demands that the rating of sovereign debt must be considered a public good and must therefore be undertaken by public actors. Why should this principle be restricted to sovereign debt, however?
In the case of the planned Solvency II Directive, too, the Commission and the rapporteur back the failed concept of self-regulation. For example, insurance groups are to be allowed recourse to internal models of risk assessment when calculating capital and solvency requirements. Time will tell whether Member States' supervisory authorities have sufficient capacity to understand these models. Personally, I doubt it.
Moreover, both the Minimum Capital Requirement and the Solvency Capital Requirement are much too low, and must be increased substantially. Since this could pose problems for some banks or insurance companies, we advocate that this capital increase take the form of government holdings entailing corresponding influence on company policy. Such part-nationalisation would be a courageous first step towards reorienting the financial sector towards the common good.
In the longer term, the whole financial sector should be moved to the public sector in any case, as only nationalisation can ensure that this sector fulfils its public duty instead of gambling itself away in search of ever higher returns on the global financial markets. It is high time conclusions were drawn from the disaster that has been caused.
Godfrey Bloom
on behalf of the IND/DEM Group. - Madam President, I have spent 40 years in financial services, so I think perhaps I know a little bit about what I am talking about here.
Let me just say a little about the UK Financial Services Authority (FSA), which will guide us onto the target of how mistakes are made. The FSA in the United Kingdom has a rule book of half a million words. Nobody understands it - least of all the FSA. The FSA interprets its own rule book in secret; they keep the fines that they impose to beef up their own salaries and pensions; there is no court of appeal. I have written to Commissioner McCreevy on this subject and it drives a coach and horses through Articles 6 and 7 of his own Human Rights Act. There is no court of appeal. There is no legal recourse at all if they get it wrong. The general public has been given the impression that if a regulation has an FSA stamp on it it cannot go wrong. There is no concept of caveat emptor.
Now it is going to be, it would appear, subsumed by some sort of EU overseer, consisting no doubt of ignorant bureaucrats, Scandinavian housewives, Bulgarian mafia and Romanian peg-makers. Frankly, I think you are going to get on really well with each other.
Bruno Gollnisch
(FR) Madam President, the reports by Mr Gauzès on rating agencies, by Mrs Weber on reporting and documentation requirements in the case of merger and divisions, and by Mr Skinner on the taking-up and pursuit of the business of insurance and reinsurance, contain provisions that are undoubtedly useful, but they cannot be described as measures to combat the financial crisis. The crisis that we are experiencing is clearly on an altogether different scale, and it cannot be resolved by these technical and one-off measures alone.
What action is needed to resolve the terrible crisis that we are experiencing? Firstly, there has to be a break with the dogmas on which you have based your work up to now, namely those that believe in the benevolence of the international division of labour, of the free movement of persons, and of goods and capital.
There has to be a break with the free movement of goods, which has pitted European workers against the workers of countries which, like Communist China, are a haven for the most cynical form of capitalism, where workers do not have the right to strike, freedom of association, adequate retirement pensions, or social protection, and where they earn ridiculously low wages. China is not the only state in this situation, however.
There has to be a break with the free movement of persons, which has led us, which has led you, to accept and even to recommend, as the only means of replacing future generations, a mass immigration policy, the disastrous consequences of which we can clearly observe today.
Lastly, there has to be a break with the free movement of capital, which was the trigger factor of the crisis, since it allowed the crisis in the US home mortgage market - which was an entirely circumstantial crisis that should have remained confined to the US market - gradually to contaminate all our economies and to ruin our savers, our workers and our employers.
It follows that small and medium-sized enterprises must be released from the shackles of tax meddling and red tape; simple rules are needed so that monetary values actually correspond to what exists in terms of industrial or service assets; and an investment policy must be launched, but it must be a viable one. Those are just a few essential measures that we would like to see taken by the Member States' governments ultimately in the context of these national policies that have shown their superior ability to react.
John Purvis
Madam President, I am pleased that Solvency II has at last reached the point of decision. Mr Skinner and his shadows have displayed exemplary resilience and patience in achieving this. I am sorry, also like others, that group support is excluded, but not surprised, frankly, in the current febrile circumstances. We need to work hard to achieve a group system that will work for and in a truly European single market for insurance, which is also effective with third countries - we cannot have any more AIG fiascos.
I would also like to compliment rapporteur Gauzès and the Council on reaching a reasonable conclusion to the regulation of credit rating agencies. Clearly, these agencies have made serious mistakes, and some form of increased regulation was inevitable. But who has not made mistakes, not least the regulators themselves, and can we be sure they are now above making any future errors?
I was concerned that the rabidly hostile scapegoating of credit-rating agencies would result in excessively intrusive and counter-productive regulation, with an overwhelming Eurocentric, protectionist and extraterritorial dimension. The compromise, I am glad to see, has muted these tendencies to some extent, but not to the extent I would have liked to have seen.
Credit ratings are an opinion - they are useful opinions, they are expert opinions, but they are only opinions, so it is up to investors to take full responsibility for their investment decisions. No doubt these lessons have now been learned and all too starkly and at a cost.
I am glad the scope is restricted to ratings used for regulatory purposes. I am glad to see that we have moved away from equivalence and endorsement, when dealing with third-country ratings, to equivalence or endorsement. But could the Commissioner please confirm that this means that investors can still invest freely in stocks and bonds in third countries which are not rated in Europe or which do not have equivalent status?
We must be on the look-out for unintended consequences. With no prior impact assessment, these will almost certainly appear and, therefore, the review requirement in Article 34 is of vital importance.
Pervenche Berès
(FR) Madam President, as far as Solvency II is concerned, that is a reform that was launched well before the crisis and that the latter has shed new light on. As legislators, we have hesitated: did this agreement need to be concluded at first reading?
In the end, the determination of the negotiators will have enabled us to reach a compromise which, I believe, has at least two virtues: firstly, it forces the insurance sector to assess its risks better, a process which, until now, still involved relatively old mechanisms that were without doubt unsuitable for the reality of what the insurance sector had become; and, secondly, it emphasises the need for supervision mechanisms to adapt to what insurance companies have become, in terms of both their multitude of consumer-focused products and offers, and their transnational set-up.
As legislators, we were very keen to take account of the reality of this market, that is to say of a market where, for example, in certain countries there are life insurance mechanisms that account for a substantial share of this sector and where, in the light of the crisis, we had to take account of the effect of pro-cyclicality when applied to the insurance sector.
We also had to ensure that the adoption of this legislation did not disrupt the architecture of the insurance market and, in particular, that it enabled mutual associations to occupy a place within this legislation. However, it is quite clear that this is just one stage, and I should like to mention six points, in relation to the sector, on which we shall have to resume our work immediately in future.
The first is obviously taking on board the conclusions of the de Larosière report and the need to ensure that equality and harmonious conditions exist among the various colleges of supervisors, and, to this end, the need to strengthen the European authority responsible for monitoring insurance companies.
The second point - many of my fellow Members have mentioned it - is to implement this infamous group support mechanism, and, on this point, I do not share the view of Mr Lipietz. Of course we would have preferred to have had group support, but what is unclear about the fact that it is difficult today for countries in which 80% or 100% of the insurance sector is in the hands of foreign companies, without any solid legal basis, to accept this mechanism? We need to make progress in this area.
The third stage for the future is harmonisation between what we are doing here and what is happening with pension funds. How can we conceive of having to improve solvency in insurance terms, but not of asking ourselves the same question where pension funds are concerned? This is an absolutely huge challenge.
The fourth task for the future concerns the installation, the creation, the establishment of a deposit guarantee mechanism, as we have today in banking, and which is still lacking in the insurance sector.
The fifth point concerns the marketing of insurance products and the guarantee that the way in which insurance intermediaries offer products to the insured makes it possible to accommodate their interests and protection requirements.
Finally, the last point concerns the transposition, in this sector, of what we are going to put in place for the banking sector, namely retention mechanisms in relation to securitisation.
On that basis, I hope that, in future, we will be able to learn from the lessons of this crisis in order to guarantee European citizens an insurance sector that represents for them a real guarantee of ...
(The President cut off the speaker)
Marielle De Sarnez
(FR) Madam President, our rapporteurs are not to blame, but I do believe that the Commission's proposals have come rather late in the day and are no match for what has taken place. To prevent any further crisis, we obviously need to be much more ambitious and more pro-active.
We have to be more ambitious and more pro-active in the area of regulation, firstly. We have to harmonise our legislation, and the most powerful signal would undoubtedly be to provide ourselves with a European regulator. That is ultimately the way to make a statement.
In terms of rating agencies, we need to create European agencies whose independence is guaranteed and to put a stop to this scandalous business of seeing agencies rate businesses that pay them.
Regarding hedge funds, we need to regulate them and to devise a form of taxation that penalises all short-term financial transactions.
Lastly, as regards tax havens, some very simple measures must be taken. We have to ban any banks that perform transactions with tax havens or that refuse to cooperate from operating in Europe.
That is all for now. However, I do believe that we need to go further, and I should like here to suggest two courses of action. The first is that we must, in my view, give thought to enlarging the euro zone and to integrating new members. This political gesture would probably be as powerful as the reunification of Germany was in its day, and it would show the solidarity that exists within Europe and would increase the influence of our Union.
Finally, the second is that we must progress towards economic, budgetary and monetary integration, and towards tax harmonisation, which is the only way to combat fiscal dumping in Europe.
All of this is necessary, but what our fellow citizens expect most of all - and I hope that the Commission is listening - is for us to take action in response to the crisis. Our fellow citizens are still waiting for a true European recovery plan and, for example, a substantial loan. They are still waiting for Europe to offer proper support to our SMEs, to genuinely plan investments for the future and, above all, to support all those in Europe who are affected by the crisis. I am thinking of the unemployed, of those working part time, and of the households that are experiencing huge difficulties at the moment.
This, in my view, is where the urgency lies and this is what Europe's leaders will be judged on in the future.
Ewa Tomaszewska
(PL) Madam President, the introduction of Solvency II and of the change to the system for conducting and supervision of insurance activities which had been in preparation for the last few years is a move of great importance, especially in a time of financial crisis. I have been involved with pension schemes for years, and I am aware of the significance of the financial supervision of pension funds in relation to the mobility of workers and the necessity of cross-border supervision.
When we encourage people to be mobile, we must ensure that those who change their country of employment and their pension system can be sure that their social insurance contributions are deducted in the right way and are credited to the right accounts, and that the security of their future pension will rise as a result of Community solutions in the area of principles of investment and supervision of pension funds.
I congratulate the Committee of European Insurance and Occupational Pensions Supervisors and its consultative panel, in whose work it was my privilege to participate until September 2007, and I congratulate the rapporteur, Mr Skinner.
Mary Lou McDonald
Madam President, the Global Financial Stability Report of the IMF estimates that the financial crisis will cost USD 4 billion. This is an estimate that may rise. This crisis has been brought about, as we all know, by a kind of casino capitalism, crony capitalism, and a financial services sector that has been subject to no regulation - or to light-touch regulation, as it is sometimes politely referred to.
The fall-out of all of this for workers and families across Europe has been nothing short of catastrophic. I have been struck in the debate and in the reports that have been produced by the very polite way in which we are addressing this scandal. I am struck by the fact that the Liberal and Christian Democrat groups are concerned at over-prescription, or that protectionism may be introduced through the back door.
The fact is that the EU response to the financial crisis has been sluggish and minimalist. The fact is that we do require a protectionism, and those that must be protected are workers and the real economy. We have yet to have a debate on the issue of jobs - although that is what matters for citizens - and this institution remains wedded to a system that has failed. Let us acknowledge that and be radical and brave.
Nils Lundgren
. - (SV) Madam President, a global financial crisis is shaking the world economy and proposals for how to prevent it happening again are now coming thick and fast. More regulation and more supervision are the 'in' things. Of course, the starting point must nevertheless be to ask ourselves what went wrong. Allow me to summarise the causes in 50 seconds.
We have an ownerless capitalism. The finance companies are run by officials who can design systems which give them gigantic bonuses and pensions when profits rise. Profits can be increased in the short term by the management raising the risk level in the companies by means of lower equity. When the risks become reality, the management have got their money and the losses are borne by others.
There is no incentive for those who could change these policies to do so. People depositing money in banks know that there are deposit guarantees. Everyone knows that most banks are too big to be allowed to go bankrupt. They will be saved by taxpayers. Rating agencies know that they will not get the work if they question the solvency of their clients. The policy that is pursued by central banks and finance ministries is based on the idea that bubbles must not be burst. They therefore grow unreasonably large.
Are we discussing solutions to these problems? No, we are not!
Othmar Karas
(DE) Madam President, ladies and gentlemen, the economic and financial crisis, the most severe since the Second World War, has a global impact. The uncertainty, impatience, helplessness and loss of confidence are palpable, as are the gaps in the regulation of financial markets. We are spurred on by the need to adopt joint European responses and take a global lead. The realisation of the need to create 'more Europe' makes things possible that were rejected and prevented only months ago by members of the Commission and the Council when they were called for by Parliament.
Our model of the social market economy - as much market as possible, as much regulation as necessary - provides the framework not only for European but also for all global regulation. The actions of the European Union have been a success, but we are still far from finished and far from achieving our objective. Another stage is being completed, and further chapters must be tackled or completed without delay. It is only resolve and the courage to take bold regulatory action at European level that build confidence.
We are also deciding today - much too late - on regulatory action for credit rating agencies. We need registration, we need scrutiny, we need to deal with incompatibilities. We are adopting the Solvency II Directive - something we would have had to do even in the absence of a financial market crisis. The Banking Directive is due for adoption in May. We must eliminate the pro-cyclical effects from the existing regulatory system once and for all. Not only hedge funds but also private equity investments need to be regulated. All executive pay with a bonus component should also have a loss component.
There is less discussion of liability issues in Europe than in the United States, and the system of European supervision is not yet ready. We should organise this according to the European System of Central Banks and hasten to take as many decisions as possible by the summer. I call on you to do so.
Robert Goebbels
(FR) Madam President, ladies and gentlemen, Parliament is about to adopt rules governing international finance. They will not be enough, since there is evidently no political will in either Europe or the United States to eliminate the excesses of pure speculation, such as, for example, naked short selling, the sale of goods that one does not even own.
The international financial crisis did not start on the islands. It started in the United States, and it spread through the City to the other large financial centres. All of these centres were supposed to have been properly regulated. Nevertheless the G20 found ideal culprits: tax havens, whether real or not.
As far back as in 2000, I recommended, in my report for Parliament on the reform of the international architecture, eliminating all the black holes in international finance, starting with hedge funds and the other purely speculative funds.
The G20 intends to regulate only speculative funds that pose a systemic risk. The systemic risk becomes apparent afterwards, when the crisis has erupted. In reality, the leading G20 powers have spared their own offshore centres, the Channel Islands, the Virgin Islands, Hong Kong and Macao, not to mention onshore centres such as Delaware.
As Jacques Attali said, in the future, London and New York will have the monopoly on speculation. The message is clear: international finance will be regulated for the benefit of the major countries only. All pigs are equal, but some pigs are more equal than others.
Andrea Losco
(IT) Madam President, ladies and gentlemen, it is right to criticise and to point out delays, but it is also right and opportune to say that today we are taking a step forward, and that in the face of this dreadful crisis, which has rocked the world's economies, the European institutions are introducing specific legislative measures in key sectors such as rating agencies and insurance.
I believe, at least from what I have followed closely, that the directive on the taking-up and pursuit of the business of insurance and reinsurance is highly significant. The agreement reached in extremis with the Council has in essence given these sectors new, more efficient rules, which take account of the dynamics of the real market, outside set formulae.
The principles of economic assessment and capital requirements, corresponding to the risks actually taken by companies, as well as risk management incentives, harmonisation, report supervision, public information and transparency are all essential aspects to making the insurance sector more competitive and strengthening protection for the insured.
The final compromise enabled reasonable solutions to be found to the problems of the possible pro-cyclical effects of the new rules and of the rules on the handling of investments. We could have done more, of course, but I believe we have reached a point from which we can take further steps forward.
Adamos Adamou
(EL) Madam President, the current economic crisis has again turned the spotlight on our firm position on the need for regulation, not deregulation of mergers between and the establishment of multinationals and other companies, the need for changes to antitrust legislation and the need for intervention to prevent monopolies and cartels which, among other things, manipulate the market, set prices and make workers redundant and which are driven solely by the profit motive.
Citizens can see the results of growth without any social face which, instead of creating permanent jobs, aims to further concentrate wealth and power into the hands of a few. The liberalisation of the financial markets, which is the standard policy of the right and others, has caused a deep economic wound which directly affects the people.
Given that, up to a year ago, the political advocates of deregulation and adversaries of government regulation were boasting about the state of the economy, allow me to remind you that it was precisely these policies that resulted in waves of poverty and inequality, in negative growth in the economy and in profiteering by food companies, which made profits in the order of 40 billion each in 2008.
However, the citizens will send a message to those who created the crisis and, with it, the inequalities.
Johannes Blokland
(NL) Now that the central banks of Europe and the United States have predicted the first signs of economic recovery, it is important not to waver in the implementation of guidelines to prevent a repeat scenario.
The role of the rating agencies in the credit crisis is considerable, as indeed, investors relied blindly on the advice of these agencies without consulting third parties. There are various reasons why the ratings were not adjusted adequately in a changing market - reasons that cannot all be prevented by introducing new rules. Introducing an establishment requirement within the European Union for carrying out rating activities is a good start but, given the global character of the market, it is no more than a start.
The European Commission must harmonise the guidelines with third countries as a matter of urgency, for which reason it would be preferable to adopt a central approach within the European Union in this area. It is clear that more is needed to regain trust in the financial markets. Let us therefore make a start with new financial morals.
Werner Langen
(DE) Madam President, today, we are seeing the first legislative proposals to emerge from the financial market package. Solvency II was long overdue: I wish to start by setting this aside. The negotiations on this were very good, the results are useful, and we shall be giving it our support.
In the case of credit rating agencies, a problem has arisen that one can really describe as a case of market and policy failure. For years, Parliament has been calling on the Commission to present proposals on various aspects of the causes of the financial market crisis, which have been a very long time in coming. What Mr Gauzès has now negotiated is useful. It establishes independent criteria and new supervisory structures and does indeed have the potential to resolve this conflict of advisory and assessment interests and to increase transparency. It is a sound proposal.
Yet it is not enough. I remember the debate in this House with British Prime Minister Tony Blair, who was acting as though he had the solution ahead of the G20 Summit in London. The fact is that, over the last 10 years, there have been refusals even from within the European Union - particularly by the United Kingdom, but also by the European Commission - to regulate certain things in a manner that should have been obvious. These were not new phenomena; the bubble had indeed grown very large. The task now is to make progress with the accounting rules - as the Commissioner mentioned in connection with executive assessment and bonus schemes. It is unacceptable for there to be no regulation in this field. In addition, we must resolve the issue of capital - of securitisation, for example - by the end of May, and also find a speedy solution with regard to European supervisory structures and the de Larosière report in general.
We cannot wait for the United States on all the issues. Let us proceed as we did with the climate action and renewable energy package: let us Europeans take the lead and present the world with a useful template. Then we shall have made our contribution to overcoming the crisis.
Ieke van den Burg
(NL) If you will allow me to make a preliminary comment, I would like to say that I have listened with astonishment to all kinds of speeches that have been delivered here by Members of this Parliament about leadership and tackling capitalism. These are all Members we never saw when we were doing the actual groundwork in order to steer the capital in the right direction.
I was shadow rapporteur for the report by Mrs Weber, and she is someone who did do the groundwork in a dossier that is about modernising, simplifying and lightening the burden for businesses when it comes to European rules and regulations. The dossier formed part of a large package of superior legislation, and I should like to stress that this superior legislation is not simply a question of deregulation and lightening the burden, but also about responding more adequately, more flexibly and more dynamically to developments with clear powers, not least for the supervisors involved.
In this connection, I should like to say two things which, in fact, also relate to the other two dossiers that are up for discussion today. First of all, there is no point in trying to solve yesterday's problems. We should, instead, anticipate what will happen in the future and put a process in place which will enable us to react to dynamic developments and innovations adequately. This is exactly why we have introduced such a process in the Lamfalussy procedure, which we developed recently.
Secondly, we should consider the level that is under scrutiny. The actors within the market transcend borders and have become international. As such, there is no point in fooling ourselves into thinking that these actors can be controlled by small national supervisors. These major actors who very much dominate the market really have to be tackled at the European and the global level. This means, in my view, that powers should be put in place at that level so that direct supervision is possible.
As it happens, the rating agencies allowed for this. It was Parliament's intention initially to grant the Committee of European Securities Regulators (CESR) the power to take care of registration, but, sadly, it did not work because of the tug-of-war that will inevitably ensue between the big countries and large financial centres to attract those head offices and be able to play first fiddle there, in an attempt to get the large rating offices under their wings. This is regrettable, to my mind. I would have preferred to see this done at European level from the word go.
The same scenario unfolded in the case of Solvency II. Firm action was also lacking when powers were granted in a bid to make binding statements at European level in the event of supervisors failing to reach agreement. This also means that these guest supervisors refuse to transfer powers to supervisors who play first fiddle. Although this is regrettable, provision has been made, not least in recital 25, for us, as Parliament, to clearly indicate that, next year, we should try to improve and strengthen this aspect based on the Larosière proposals.
Olle Schmidt
(SV) Madam President, Commissioner, the financial and economic crisis has shown that we in Europe must be able to act together. We should be pleased that Europe had, and still has, the euro rather than 16 different currencies. This has alleviated the difficult times. It was only when the euro zone countries met in Paris last autumn that the crisis could be stabilised and the recovery could begin. Following this, the global efforts continued with the G20 summit, which was the start of something new - a world where the major nations of the world met on equal terms.
We must now ensure that we are better equipped next time the crisis strikes. The directives that are being discussed today are important and, in my opinion, balanced. We need greater openness and transparency on the market, greater opportunities to act across borders and improved supervision. We must also combat protectionism and, in my view, support free trade. We must also limit risk-taking and put a stop to excesses. The free market also needs its boundaries and rules. As a Liberal, I can also agree with this, of course. However, we must take care not to over-regulate, which is a risk in the current mood. Let us not forget that the market economy creates prosperity.
Bernard Wojciechowski
(PL) Madam President, Commissioner, at the beginning of the month we were told that all remedial measures against the financial crisis have been taken. The budget of the International Monetary Fund will rise by as much as USD 500 billion, which means it will treble in size. The World Bank will be USD 100 billion richer, and USD 250 billion has been set aside for subsidising international trade. There is to be a supposedly more stringent supervision of the finance market and control of tax havens and bankers' salaries. President Obama said that the recent G20 summit will be a turning point in the pursuit of global economic recovery.
On the whole there is probably nothing to worry about, although perhaps there is one exception. Why did world leaders wait so long to bring in their elaborate emergency support plan, and why did they not condescend to bring about global economic recovery earlier? Did they not have that trillion? The fundamental question is, therefore, where did that trillion come from? From the sale of 400 tonnes of gold? It would appear that in official communiqués not a word is said on this subject. Perhaps the money was borrowed from a bank? Since there will now be a recovery - and here I direct my request to Mr Barroso and Mr Topolánek - perhaps the leaders will hold another meeting and add another trillion, so that we will have a kind of 'turbo-recovery'.
Margaritis Schinas
(EL) Madam President, there can be no doubt that in Europe we are today suffering the consequences of an anarchic, eccentric American/Anglo-Saxon model of organising the financial markets, which learned how to function without rules, without supervision and without democratic accountability and which, of course, polluted the global and European economy.
With the texts which we are debating today and will vote on tomorrow, we are building a protective shield here in Europe for the citizens. A protective shield which will safeguard them from this paradox in which we are currently living, where money flows are supranational and the rules of supervision and accountability, where there are any, are national.
So Europe is reacting, albeit slowly, but better late than never. This, of course, leaves two major questions which need to be answered. The first question is: why did we need to live through a crisis in order to react? Why did we need to wait for all this to happen in order to introduce rules? The answer will be given by the citizens, by rewarding those who are calling for legislation and punishing those who wanted to persuade us that self-regulation is the panacea for all the evils we are experiencing today.
The second question is, will these texts that we are debating today be the only ones or will there be overall supervision and an overall review of the legislative and regulatory framework? The answer to this second question will be given by us because, as co-legislators, we shall exert pressure so that we do not just stay with the Gauzès report on credit rating agencies, which failed to see the iceberg coming towards the Titanic, which is why what happened did happen, but which quickly saw that certain Member States needed to be downgraded because they did not 'allegedly' have an adequate credit rating.
We need to examine and correct all this from the beginning: nothing will remain the same in the European Union after the current crisis.
Manuel Medina Ortega
(ES) Madam President, I refer solely to the report by Mrs Weber on the proposal for a directive of the European Parliament and of the Council amending Council Directives 77/91/EEC, 78/855/EEC, 82/891/EEC and Directive 2005/56/EC as regards reporting and documentation requirements in the case of mergers and divisions.
We are in the process of simplifying administrative procedures. Our position is in favour of the proposals from the Commission introducing certain changes, but we have included some amendments which have been tabled by nearly all the political groups and which, naturally, I have supported, since they make it possible to simplify matters.
We are speaking, of course, of a very important change, which is the elimination of documentation, the introduction of web pages and references to web pages, the elimination of requirements for experts and other types of requirement that up until now have been obligatory, which could lead to a fairly significant reduction in costs and time, while still providing guarantees both to creditors and, for instance, to workers in the undertaking and other persons with access to it.
I believe that the proposals made to us by the Commission are fairly positive and that the proposals to amend the text that we are tabling adopt the same approach, guaranteeing independence, above all in the case of the use of web pages, and the need for references, in other web pages that are used, to any information in these web pages, so that this use is not complicated and there is sufficient additional information.
In short, Madam President, I believe that Parliament will be able to adopt this proposal for a directive by a considerable majority and that the resulting text will be better than the text originally submitted to us by the Commission.
Margarita Starkevičiūt
(LT) We can see from current events the influence large financial groups, and the mistakes they make, have on the real economy, especially the economies of small countries. Therefore, the documents presented should create a legal framework to manage two main processes: firstly, to harmonise the free pro-cyclical movement of capital within a financial group with the necessity to ensure the liquidity of the real economy and macroeconomic stability during the economic recession; secondly, to help share responsibility between home and host supervisory institutions, to ensure that a financial group's activities are appropriate, and to clarify who will cover losses if mistakes are made.
It must be said that the document presented is only the first step in this direction, and I would like to stress that these problems will not be solved unless the impact of competition law on the activities of financial groups is assessed. We always forget this aspect and it should be a priority in the new term of Parliament.
Sirpa Pietikäinen
Madam President, I think that this package, which is part of the measures to deal with the financial crisis, is quite good with regard to Solvency II and the credit rating agencies and will result in good compromises and outcomes.
However, when we look to the future, I would like to raise three issues. Firstly, I would like to see the European Union being more ambitious and active at global level. Even though the G20 outcomes are steps in the right direction, they are still too modest and far from having a proper, global, convention-based regulation, both on funds and different financial instruments, and on regulation.
Secondly, when it comes to the de Larosière report and our own actions, I think that the outcome of de Larosière was rather good, especially when it comes to supervising and analysing the systematic risk at European level. But I would like to point out two pitfalls here. Firstly, concerning micro-supervision: I do see that the proposed moral there, which would still be based very much on cooperation instead of a centralised European aspect, has very serious problems. Secondly, from what we have already heard about the Commission's preparation concerning venture capital and hedge funds, there is much to be hoped for and expected from there.
So, if we really want to be effective at this level globally, we will have to do our homework properly, and I would really like to see a better and more ambitious approach from the Commission in this field.
Antolín Sánchez Presedo
(ES) Madam President, the package of measures on credit rating agencies, insurance and company mergers and divisions is a first step in boosting the confidence and efficiency of the financial markets. It is in line with the principles endorsed by the European Union and the G20 of reinforcing transparency, responsibility and integrity within the financial markets and places the European Union in a position of international leadership. For this reason, I support the measures, even though we will have to go further.
The failings of the credit rating agencies are one of the causes of the financial crisis: self-regulation is not enough. The regulation plays a pioneering role in introducing registration, responsibility and monitoring of the agencies, in tackling conflicts of interests, improving working methods and the quality of various types of qualifications, including those from non-EU countries. A future revision of payment systems and the creation of a European public agency are still to be dealt with.
The directive on solvency codifies all the existing acquis on private insurance and incorporates technical advances on improved risk management that will give impetus to innovation, improve resource use and increase the protection of insured persons and financial stability within the sector. The new framework for the supervision of insurance groups takes a prudent line, open to further development. The creation of supervisory bodies is a step forward in the process of the integration and reinforcement of European financial supervision, which must continue to advance and could be a model that could become a world standard. Parliament will monitor and promote its development.
Finally, the amendment of various directives in relation to reporting and documentation requirements in the case of mergers and divisions is a form of legislative simplification, and highlights the fact that the aim of reducing burdens on businesses by 25% can perfectly well be combined with strengthening the rights of the public and shareholders, provided that information and communication technologies are used.
Daniel Dăianu
Madam President, I am glad that, in the end, common sense has prevailed in Parliament and the Commission concerning the causes of this financial crisis. People have realised that this crisis is not of a cyclical nature and that a thorough overhaul of the regulation and supervision of financial markets is badly needed. The de Larosière group report and the Turner report, too, have made this quite clear. These reports are in analytical tune with the Lamfalussy follow-up report of Parliament.
The documents which are being debated today are to be seen in the same logic of action. Unfortunately, our economies will still suffer for quite a while, not least because of the public budgets and, probably, future inflationary facts of the efforts which are being undertaken to clean up the huge mess. Let us hope that we will learn more this time than we have from previous episodes of crisis.
Klaus-Heiner Lehne
(DE) Madam President, ladies and gentlemen, this is a really interesting, good debate - for the simple reason that, looking at the reports, we are combining two aspects that do not, at first, appear to be directly linked but which are related to ways of coping with the crisis and reviving the economy.
I was shadow rapporteur in the Committee on Legal Affairs for the Weber report, on which I should first like to congratulate Mrs Weber most warmly. The Weber report is not about crisis management in the traditional sense but about simplifying company law and helping to cut red tape and eliminate burdens on companies. This, coming at this specific point in time, at the end of the parliamentary term, clearly proves and exemplifies the European Parliament's handling of this particular issue and its attempts to further develop company law in the interests of companies - which I very much welcome.
As this debate also presents the opportunity to say something about financial market legislation in general, it should be noted that the fact that we in Parliament are now achieving results and concluding our proceedings at first reading on the first financial market package also sends out a signal towards the end of this parliamentary term. I believe that this, too, is important.
Nevertheless, I should also like to point out that the second package - which, of course, is still being prepared by the Commission at the moment - will unfortunately be too late for this parliamentary term. There are reasons for this. As you will remember, we have indeed discussed the regulation of certain areas of financial markets in the past, namely in the committees of this House and on various occasions in plenary, but this always met with massive opposition. There was opposition from the Council. The socialist UK Prime Minister, Gordon Brown, refused to acknowledge certain realities for a long time.
There was also opposition from the Commission - which had been offering resistance on hedge funds and other sectors for a long time - and from within this House. When it came to launching legislative own-initiative reports, the Chairman of the Committee on Economic and Monetary Affairs rejected this for a long time on account of an unnecessary dispute over competences. I am pleased that everyone has now seen the light. Commissioner McCreevy is regulating hedge funds, Mrs Berès is permitting own-initiative reports and Gordon Brown, too, has changed his mind. This is a positive development, one that my group and I very much welcome.
Jean-Pierre Audy
(FR) Madam President, my speech will relate to the report on rating agencies, and my first words will be an expression of gratitude to my friend, Mr Gauzès, who has acted competently, lucidly and pragmatically.
However, at the risk of straying from the subject somewhat, Madam President, I should like to speak about the problem of the rating of states. In this crisis that we are experiencing, states have become major financial players in the face of the potential collapse of the financial sector.
They have taken guarantees, they have debts, they have equity stakes, and that is why I wonder whether the European Union ought not to propose, as part of the new global regulation of capitalism, the creation of a global public state rating agency, an independent body that would come under the International Monetary Fund and would enable citizens to have an idea, via these ratings, of the quality of the finance of states, which, I repeat, have become key financial players.
Kurt Joachim Lauk
(DE) Madam President, three brief points are important in my eyes. Firstly, we have achieved a sound consensus on the need to subject all financial institutions, without exception, to regulation in future. The Commission is now able, little by little, to put forward proposals encompassing all actors - which is absolutely essential.
Secondly, we should consider how to develop the European financial supervisory authorities thus necessitated and bring them under our control, and to significantly reduce our dependence - be it official or unofficial - on the regulatory institutions of the United States, since we know these to have been a spectacular failure.
My third point is that I am concerned about financial developments in the euro area as a whole, as the spreads and indebtedness between the various countries of the euro area and the credit rating activities of these countries are growing apart rather than together. We should take every possible measure in this regard, and should require the individual countries to enforce discipline.
My final point is that we need to ensure that the EU does not end up falling into debt. The EU Member States are deep enough in debt as it is. We do not need any more indebted institutions.
Pervenche Berès
(FR) Madam President, I would just like to point out to Mr Lehne that it was the socialists in this Parliament who wanted legislation on speculative funds, and that it was their determination that above all led to our having this legislation on speculative funds and, also, in Mr Gauzès's report, to the call for the Commission to work on the idea of a public credit rating agency.
Moving on, I should like all the same to take advantage of this opportunity to tell the Commissioner that I am astonished at this situation where double standards exist in relation to the Commission's monopoly on legislative initiatives. When the Council asks the Commission to put a proposal on the table to harmonise the bank deposit guarantee, the proposal is there three weeks later. When the European Parliament submits a proposal for a legislative initiative by Mr Rasmussen, which was voted for by the vast majority of this plenary, you work it so that the proposal in question is put on the table just when the European Parliament will no longer be able to debate it.
We asked you for a legislative initiative in this area last September. What have you been doing since then, Commissioner?
Charlie McCreevy
Member of the Commission. - Madam President, I express my appreciation and admiration for the efficient handling of these three files by Parliament and the three rapporteurs in particular. This has resulted in a quick consensus, which will definitely improve the functioning of our financial markets. The EU regulation on credit-rating agencies will improve integrity, transparency, responsibility and good governance in the credit-rating activities.
Mr Purvis asked a couple of questions in this particular regard, concerning the freedom to invest in particular products. Now, investment is free to all products, whether from the European Union or not. Ratings are not mandatory, so EU firms are not obliged to invest in rated products. But let me stress that, for regulatory purposes - that is, calculation of capital requirements - the ratings that can be used are those either issued in the EU for both EU and third-country products, or endorsed or recognised as equivalent in the European Union.
Although I am disappointed with certain aspects of the agreement on Solvency II, as I outlined earlier, the EU will have a framework for the insurance industry which could serve as a model for similar reforms internationally. Of course, this is not the end of the story. Much work remains to be done: implementing measures will need to be in place some time before October 2012 in order to give Member States and the industry some time to prepare for the introduction of Solvency II. I can assure you that the Commission will play its role in order to facilitate this process and put these long, overdue reforms into practice as soon as possible in the interests of all the parties involved.
Even though I referred to this in my earlier introductory remarks, I would just like to stress again that group supervision remains in the proposed Solvency II, although group support is out - I think it is just important not to get two concepts mixed up entirely.
Finally, with the simplified reporting and documentation requirements in the cases of mergers and divisions of public limited liability companies, the agenda on the administrative burden reduction is advancing, and this will contribute to the potential for growth and help Europe on the way to economic recovery.
Jean-Paul Gauzès
Madam President, ladies and gentlemen, I shall limit myself to two or three brief remarks. The first is that there has been fairly broad agreement in this House concerning the report on rating agencies, and, of course, European legislation will evolve over time, but I believe that, for now, it may serve as a model for an international agreement.
Finally, allow me to thank the shadow rapporteurs, Mr Pittella and Mr Klinz, who have worked hard alongside me, the teams from the Commission, the Presidency and, of course, the secretariat of the Committee on Economic and Monetary Affairs and the experts, without whom this work could not have been concluded so successfully.
Renate Weber
rapporteur. - Madam President, it was quite interesting listening to all the speeches this morning in Parliament at a time not only when we are living through the toughest financial and economic crisis, but also when the European elections are approaching. The reports which we have discussed today, and will vote on tomorrow, are not meant to solve the financial crisis, but we hope they will help us avoid making the same mistakes in future, or at least major mistakes, and hopefully they will support a relaunch of the European economy.
When one hears that small enterprises today have to spend 10 times more than big companies in order to comply with EU legislation on reporting requirements, it is normal to wonder why this is so and how we have come to have rules which through their effects may actually kill these small enterprises and why it has taken us so long to change this. I am glad that Commissioner McCreevy mentioned that company law is probably the toughest in the EU acquis communautaire. Maybe it is time to change it, certainly not to make it softer, but perhaps to bring it more in line with the current realities we are living through.
If we want to be more efficient, it is better to put our energy into being constructive, and I think it is fair to say that what happened with the package we discussed today is proof of this. It is proof that we have acted responsibly and we have reached a compromise with the Council and the Commission in order to adopt this package at first reading. Can we do more? Certainly, but let us vote on this and work in the right direction.
Peter Skinner
rapporteur. - Madam President, I would like to start by saying what I should perhaps have said first of all, which is a thank you to all the services of the Commission, the Council, and particularly the Parliament, for the work that they put into this. I have to say that without their work and their help, we would not have achieved this.
Like many around the room, we are quite astounded by the level of technical detail that goes into many of these reports, but let us say about Solvency II that it was forged outside a crisis to face a crisis. It has risk management in it and - as many people have heard round the room - this is a first for much of the financial services legislation. It also does - and I agree with the Commissioner - contain group supervision. Group support, unfortunately, is out, but we have heard all about that. Let us hope that we can get that back. Capital is defined as well. Many aspects of this report make it a world leader.
My second point is about the strategic impact of using such legislation. In many respects, just having a regulation that works over 27 Member States is not going to be helped if we do not have the twin, which is a strategic regulator at a European level which works over 27 Member States as well. We need to overcome the differences that exist between regulators and make sure that we speak with one voice. It is particularly important when we come to recognise regimes elsewhere in the world. Just this weekend I met with Paul Kanjorski, Chair of the Subcommittee on Finance in the US Congress, and others, who are now talking about accelerating the prospects for a single regulator at a federal level in the United States. It they do that before we do it in Europe, we could be severely embarrassed by not having the regulator we need at a European level.
This is a report which is at a global level and a global measure, a process about which we could all feel proud, but we also need to make sure that we continue to push for the changes on the issues thrown up by the de Larosière report and also on group support which will bring about economic efficiency. I hope that everybody can support those measures.
President
The joint debate is closed.
The vote on the report (Α6-0191/2009) by Mr JeanPaul Gauzès will take place on Thursday, 23 April 2009.
The vote on the report by Mrs Renate Weber and the report by Mr Peter Skinner will take place today.
Written statements (Rule 142)
Sebastian Valentin Bodu
I do not wish to discuss here the importance of rating agencies. Everyone knows that they are crucial in providing a sound basis for investment decisions, whether in relation to the financial products or the issuers (meaning therefore that they provide much more than simple opinions). However, I do want to emphasise the importance of setting up a European agency.
During a period of deep economic crisis like the one we are just going through at the moment, rating agencies should remain, regardless of the economic conditions, transparent and credible instruments, providing support as Europe steers through these troubled times. We cannot disguise the fact that the current crisis is also down to rating agencies as they have analysed in a totally confused manner conventional instruments along with other hybrid instruments, all against the backdrop of accusations of a lack of transparency and conflict of interests.
We need new organisations in this sector, which will generate competition in providing objective ratings. We must think about protection for the investors and their confidence in rating agencies. The EU must guarantee that rating agencies operate according to clear regulations. What better way then to fulfil these conditions than to set up a European rating agency which operates according to Community regulations.
Călin Cătălin Chiriţă
I would like to say that I welcome and support the proposal for a European Parliament and Council directive amending previous directives on reporting and documentation requirements in the case of mergers and divisions. I particularly welcome the concrete measures proposed for reducing the administrative burden which needlessly disrupts the economic activities going on in the European business sector.
I support the objective of this initiative to help boost the competitiveness of companies within the EU by reducing the administrative burden imposed by European directives in the area of commercial company law, where this reduction can be achieved without having a major adverse impact on the other parties concerned.
I strongly advocate the effective application of the action programme approved by the European Spring Council in March 2007, aimed at reducing the administrative burden by 25% by 2012.
I believe that European firms and citizens greatly need a reduction in the red tape imposed by the Community acquis and certain national legislations.