Establishing integrity and trust post Libor/Euribor:
- extracts from the Public Hearing
EP Committee on Economic and Monetary Affairs
Lieu: Brussels, Belgium - EP
End production: 24/09/2012 First transmission: 24/09/2012
On Monday 24 September, the ECON committee met with financial experts, such as Daniel L. Doctoroff, CEO and President of Bloomberg, commissioner Barnier and competition commissioner Joaquín Almunia. They discussed on ways to rein in the banks, tackle market manipulation and establish integrity and trust in the wake of the scandal this summer concerning the rigging of the London inter-bank lending rate (Libor).
Only the original language version is authentic and it prevails in the event of its differing from the translated versions.
||Exterior shot of the EP, Brussels
||Introductory shots: poster of the hearing, arrival of Commissioner Joaquín ALMUNIA
||SOUNDBITE (English) Joaquín ALMUNIA, Commissioner for Competition: "Banks and other financial services are essential factors of growth. They can make our economies more efficient and our lives easier in many ways. But without a sweeping reform of the regulatory framework, they are simply not sustainable. We need to see the end of what many people call the 'casino capitalism'. We need to redefine the place for finance in the real economy and in the social and political system".
||SOUNDBITE (English) Joaquín ALMUNIA, Commissioner for Competition: "Other top priority investigations are those that involve the group of major international banks, which we suspect to have formed the cartel to manipulate benchmark rates, not only one cartel, probably several different cartels, that includes Libor, Euribor, and Tibor for a number of currencies".
||SOUNDBITE (English) Joaquín ALMUNIA, Commissioner for Competition: "While our investigations aim at sanctioning the collusive behavior of some of the panel banks and brokers, I believe that the endemic problems that come to surface with these investigations, in particular the existence of perverse incentives in the functioning of the current system, issues of conflict of interest and lack of transparency in the financial data market, will eventually need regulatory solutions."
||SOUNDBITE (English) Masamichi KONO, Chairman of the International Organisation of Securities Commission (IOSCO) Board: "Given the global nature and the extensive use of benchmarks in an extremely broad range of financial markets and products, it is imperative to develop internationally coordinated policy guidance and principles that ensure their credibility and integrity. Failure to address this issue would, without exaggeration, put the integrity and stability of the global financial system at risk and would result in significant losses for the economies and investors worldwide".
||SOUNDBITE (English) Daniel L. DOCTOROFF, CEO and President of Bloomberg: "The failure of Libor, which is to say the failure of the current mechanism designed to inform markets on what banks charge each other to borrow is a classic illustration of a failure that flows from a lack of transparency".
||SOUNDBITE (English) Daniel L. DOCTOROFF, CEO and President of Bloomberg: "Bloomberg's prescription, let's call it for the moment 'B-Libor', the Bloomberg Interbank Offer Rate, is not revolutionary. It simply applies the principles of database analysis and transparency".
||SOUNDBITE (English) Daniel L. DOCTOROFF, CEO and President of Bloomberg: "Everybody who's spoken today on the issue would agree that injecting in a rigorous way market observable, comparable transactions is an important element and what we are offering is the ability to actually do that".
||SOUNDBITE (English) Thierry PHILIPPONNAT, Secretary General of Finance Watch: "As long as the profits derived from cheating are greater than the potential penalties, there would be an incentive for banks to cheat and the trust of the greater public will not be re-established. It is also fundamental that operators should be held personally responsible for their actions, as it is currently discussed in market abuse debate".
||SOUNDBITE (English) Joanna COUND, Head of Government affairs, Blackrock investements: "We advise policy makers against mandating a move away from Libor. The recalibration of existing Libor contracts to a rate no longer based on inter-bank unsecured lending rate would represent a fundamental change to the nature of such contracts and could potentially lead to much greater dislocation disruption than the distortion of Libor that may have occurred over the past few years".
||Arlene McCARTHY (S&D, UK) Vice-President of the Committee on Economic and Monetary Affairs: "I think we've reached our understanding on lot of these issues, and we'll need to take some time to reflect and digest on how we want to take this forward". She thanks the participants, end of the hearing.
||Cutaways (9 shots)