11 December 2008

ECON consideration on draft report on CRD

Mr Karas made clear that he will not reduce his report on the Council compromise. The directive must be coherent with other important directives, and the results of the G20 meeting need to be incorporated

Rapporteur Othmar Karas harshly criticized the Council which seems to anticipate an agreement on the CRD in his draft conclusions. Mr Karas made clear that he will not reduce his report on the Council compromise. The directive must be coherent with other important directives currently discussed in the Parliament and elsewhere, such as Basel II, Solvency II and the Credit Rating Agencies. With regard to supervisory arrangements also the van den Burg Report needs to be considered. A coherent wording on supervisory arrangements and equal treatment of level 3 institutions has to be guaranteed, he said.  

 

In particular, the results of the G20 meeting needs to be incorporated into the Commission proposal, he said. Also, decisions taken, or to be taken in Basel had to be considered. Pro-cyclicality issues need to be looked at closely, he said. Issues that might deepen the crises situation have to be avoided.

 

Supervisory arrangements and securitisation are the two main issues he will focus on (see also here). Colleges should only be temporary measures towards a European supervisory structure, he said and called on the Commission to come up with proposals by 2010.

 

For the time being, the consolidated supervisor should have the last say on the consolidated level, whereas the last say on the local level should remain with the competent authorities responsible for supervision at this level. For the joint decision all views of the relevant authorities should be considered.

 

With regard to securitisation, Mr Karas calls for more ambitious and differentiated approach which might include stronger rules for certain classes. It has to be distinguished between securitisations, where the originator or sponsor retains an interest in the underlying assets and originates those assets, and securitisations, where the originator or sponsor has no such involvement, he said and proposes a retention rate of 0% and 10% respectively.

 

Pervenche Beres made clear in her statement that she intends to include two other aspects into the proposal, namely issues with regard to micro-credits and financial advisory obligations. However, a 5 % retention rate seems to be appropriate for her.

 

Sharon Bowles was concerned about the wording with regard to temporary colleges which might be misunderstood. Also, a 10 % retention rate seemed to be too high, she said. John Purvis regarded the retention rate doubtful at all and asked for possible alternative approaches such as warranties. He also said that interbank deposits are subject to too stringent requirements.

 

Also Astrid Lulling regarded the increase of the retention rate to 10 % problematic, and she warned that legislators should not overreact to the crisis. She criticized that a revision by 2010 might be too short, a concern that was also expressed by Mr Bescey.

 

 

The Commission representative made clear that with regard to the supervisory arrangements the Commission will wait for the report of the ‘de Larosiere Group’ next year. He also said that amendment No 12 needs to be clarified with regard to the definition of ‘interest’. Further issues the Commission is particularly concentrating on are related to pro-cyclicality issues and amendment No 1 on own funds.

 

Draft report

Commission document

 

Timeline:

Deadline for amendments – 6 January 2009

Consideration of amendments – 22 January 2009

Vote in ECON – 2 February 2009

Vote in Plenary – April 2009