“Six months since this turmoil started we still don't know how big the losses are”, Commissioner McCreevy said and questioned whether Europe would be ‘well positioned to deal with the default of a bank which had operations and depositors in several Member States’.
However, the response of policy makers and regulators “needs to be long term, cautious, practical, and forward looking.”
On the complexity of financial products McCreevy criticized that, although financial innovation in itself is a good thing “the understanding of what has been innovated has fallen behind.”
Also, there are even more ‘testing times’ to come for existing accounting rules. “I am calling on the Standard Setters, Issuers, Regulators and Preparers to undertake the analysis and draw the lessons from the use of "mark to market" in the light of current market conditions”, he said.
The Commissioner also questioned the numeration structures in financial institutions and called industry to find a balanced approach. “If it is not found, political reality could well make calls for a more interventionist approach difficult to resist”, he warned and proposed that this ‘needs to be looked at in the context of revisions to Corporate Governance codes’.
Full speech
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