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“It is not clear whether this turmoil has been the result of stupidity, ignorance, or misplaced opportunism”, Commissioner McCreevy said. “Hopes that it might be short-lived have now given way to a realisation that significant problems still lie ahead”.
“Some market participants to forget some basic banking, lending and underwriting principles”, McCreevy said. Also, several CEO's did not understand many of the new products that their firms were designing, underwriting and trading. “The opaqueness of the underlying financial instruments – and the trading of them on the over-the-counter markets- made the losses hard to locate. “
Commission action
As for transparency, the Commission works to identify self-regulatory proposals to obtain comprehensive data on securitisation markets.
Regarding valuation standards a first assessment by the relevant organisations of the issues at stake should be completed before the summer, he said. “In the longer term, global standard setters will, I am certain, need to adapt or improve accounting standards in the light of the lessons learnt from the current crisis.”
The Commission is also working towards further enhancements to the Capital Requirements Directive (CRD) and will come forward with a proposal no later than this October. “It will be essential to secure a commitment from both the Council and the Parliament to finalise agreement on the Commission's proposal before April 2009”, he said.
Finally, with regard to the credit rating agencies the Commission is awaiting the assessments from CESR and ESMEG in spring and will decide on further steps that after.
However, McCreevy also warned “that any over-reaction in the short term risks harming the financial markets”.