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02 June 2010

ECON committee – first exchange of view on the CRD IV own-initiative report


Rapporteur Othmar Karas called for a coordinated timetable on both sides of the Atlantic. He warned that differences in implementation will create a disadvantaged level playing field and undermine the future CRD IV or Basel III.

Rapporteur Othmar Karas (AT/EPP) presented the following points:
·         The Americans are putting around the idea that all parts of CRD III will be putting in place but not at the same time. The Basel committee, CRD IV or Basel III have now approached the end of the discussing and after the summer there will be a proposal. It is urgent that the EP get involved in this process. The EP should be involved in shaping the calendar on the CRD IV.
·         The EC has to report on the EP what is happening on the Basel committee. The present proposal could also hamper economic growth, and this is not desirable. Americans are not ready to adjust the balancing rules for a new method of measuring risks. The impact of risks of balance sheets, the new Basel III is considering to weight risk on a permanent basis and if the US do not apply to this then we will not create a level playing field.
·         There is a need to find a balance between banks that are listed in the stock exchanges and those smaller that are not carrying the same types of risk.
·         Anticiclycal measures could be created it the right balance is not achieved. The EP has to work on alternatives in order not to end up with a one size fits all approach.  He called on the Basel committee to consider the EP own initiative report carefully and to include the EP proposals.
Shadow Rapporteur Udo Bullman (DE/S&D) advocates for the following points:
·         A more balance capital structure depending on the bank is needed, but at the same time it has to be done carefully otherwise there will be counterproductive effects.
·         There is a need to carry on the transatlantic dialogue and have a common timeline.
·         Self regulation bodies adopted by the industry cannot replace regulation.
Shadow Rapporeur Philippe Lamberts’ (BE/Greens)  remarked that :
·         Defintion of capital is essential and legislators must get it right
·         As regards leverage ratio he stressed that there is a need to considered the limit on leverage, there is a need to put ceiling on leverage.
·         Definitions of what exactly is off balance sheet. His political group believes that instead of defining what is off balance sheet, the solution is to bring all elements into the balance sheet. Knowing what is off balance sheet is rather difficult to specify, it should be limited to do nothing off balance sheet.
·         Reduction of the size of financial institution, the capital requirements should be progressive on the size of the institutions.  In order to go back to  the concept of narrow banking, there are two ways to achieve it:  to mandate or to consider to lower the capital requirements on banks that by their own decision are becoming a narrow bank.  The second option  will create and incentive to go into a narrow banking model.
Next Steps:
 
18 June - deadline for amendments
28 June - Consideration of amendments
6 September - vote in ECON committee  
 


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