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17 July 2002

EMAC: Call for Joint Action to Restore Market Confidence

Following the testimony of Fed Chairman Allan Greenspan before the US Congress, the Chair of the European Parliament’s Committee on Economic and Monetary Affairs, Christa Randzio-Plath called for closer international co-operation to restore market confidence. “The non-persuasive measures taken by the US government do not go far enough towards remedying the widespread mistrust in financial markets and company reporting” the Chairwoman said and called for closer Co-operation between the US Senate and the European Parliament.

“In addition, the European Central Bank and the US Federal Reserve have a common responsibility for securing financial stability” Mrs. Randzio Plath went on and called for a consistent regulatory framework which guarantees a high degree of transparency, good corporate governance, an efficient prudential supervision.

The US House of Representatives on Tuesday approved 391-28 a hastily drafted corporate fraud penalties package that calls for up to 20 years in prison for corporate fraud violations. The vote gives the House its own proposal to use as a negotiating tool with the Senate as final negotiations on corporate reforms package begin.

The move came one day after the Senate on Monday unanimously supported a sweeping package of corporate fraud and accounting industry reforms. Federal Reserve Board Chairman Alan Greenspan also told lawmakers Tuesday that tougher corporate fraud penalties are 'the most important part' of the congressional effort.

In his written testimony, Greenspan repeated his harsh criticism of business executives who mislead investors. He restated his view that a startling wave of accounting problems stemmed in part from 'an infectious greed' and blamed that for undermining investor confidence in corporate America.

EMAC press release
Testimony of Chairman Alan Greenspan

© European Parliament

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