This says ‘Stormy Weather’ ahead. Sarkozy is becoming a vulgar caricature of his real sel-self a self-centred bully.
Christina
THE TIMES 2.12.09
We are in charge now, Sarkozy tells the City
Francis Elliott, Suzy Jagger, Martin Waller and David Charter
Alistair Darling has delivered a blunt warning to the EU’s new French finance chief against meddling with the City of London.
As Nicolas Sarkozy gloated over impending curbs on the City, the Chancellor said that such moves would drive financial services out of Europe.
The French President’s glee at the appointment of Michel Barnier as Commissioner for the Single Market took on an edge of menace yesterday when he said that unfettered City practices must end.
“Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]?" he said yesterday.
"I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism," he said.
His implicit threat was just what Downing Street had feared when Mr Barnier, formerly an agriculture minister, was given the portfolio last week.
Mr Darling, writing in The Times today - see below, says that it would be a “recipe for confusion” if firms were supervised by the EU as well as national watchdogs and that Britain would not accept new laws that could lead to taxpayers picking up the bill for bailouts ordered by Brussels.
He rejects claims that the economic crisis was the fault of the “Anglo-Saxon” model, pointing out that French and German banks were among the biggest creditors of the failed US insurance giant AIG.
Terry Smith, a prominent banker, said that the threat of increased regulation was already threatening the City’s future.
“I’ve never seen so much work going on by companies, individuals and teams of people to evaluate relocation out of the UK,” he said.
A strong City is not just in Britain’s interests
Our financial institutions are New York’s only rival. Europe must not be allowed to hamper them
Alistair Darling
As Michel Barnier, the new EU Single Market Commissioner, takes over the reins of financial regulation, the stakes are high. Regulatory reform throughout the world is imperative, and Europe, home to the world’s largest single market in financial services, has a particular responsibility. If we get it right, we have the potential to be the safest and strongest marketplace in the world, our regulatory framework a competitive advantage. Get it wrong and we risk losing business to less regulated jurisdictions. Nothing would be more self-defeating.
It is undeniably in Europe’s interest that Britain’s financial hubs, the City of London and Edinburgh, flourish. Six hundred overseas financial institutions operate in the UK, 420 of them European. London manages 50 per cent of the world’s sovereign wealth fund assets. More than half of new share issuances take place on our stock markets.
The City is building on its historic strengths to become a leader in new financial sectors — 80 per cent of low-carbon trading under the EU emissions trading scheme is done from its desks and screens.
Just as it is unquestionably in Britain’s national interest to strengthen the European financial marketplace, so it is also in the interests of Frankfurt and Paris.
Europe is rightly proud of its global financial centres. In a single market, what benefits one benefits them all. This is the principle that EU finance ministers, meeting in Brussels this morning, must stick to when agreeing a new risk-spotting and standard-setting regime. Tougher regulation is in everyone’s interests. Taxpayers, depositors and bankers themselves — all will gain from a safer banking system.
Every country is overhauling its regulatory system because banks failed in every country: Lehman Brothers in the US, Commerzbank in Germany, Fortis, ING and Dexia across France, Belgium, Luxembourg and the Netherlands, Royal Bank of Scotland in Britain.
That’s why the British Parliament is now debating the Government’s Financial Services Bill. It will give the Financial Services Authority greater power to investigate individual banks and give consumers the clout to demand a better deal from banks.
But banking is a global business. Decisions taken in one country spill over quickly into others. Take the US Government's $85 billion rescue of the insurance giant AIG; because of the complex web of financial links, significant amounts were paid to overseas banks — Société Générale received $11.9 billion, Deutsche Bank $11.8 billion and Barclays $8.5 billion.
Such a global reality requires global regulatory solutions. With the UK in the chair, the G20 has agreed wideranging common standards. Living wills are now the agreed tool for ensuring that banks, not taxpayers, meet the cost of any future failures. Deferral, clawback and limits to cash bonuses are now the cornerstones of the international approach to pay. Higher, better quality and co-ordinated capital requirements are being developed throughout the world.
How do we strengthen our single market? We need to spot the risks that the financial sector can pose to the real economy more quickly. I strongly support the proposal to create a European systemic risk board to monitor risks to financial and economic stability within and outside Europe. Importantly, this will bring together all of Europe’s regulators and central banks, not just those within the euro area, and will work in close partnership with the International Monetary Fund and worldwide Financial Stability Board.
The EU also needs a single rulebook for financial regulation, covering banking, insurance and securities; and a mechanism for national supervisors to co-operate in its implementation. That is why under the Swedish presidency the EU proposes to establish three supervisory authorities, one for each sector.
We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market. National supervisors, such as the FSA, must remain responsible for supervising individual companies. Making companies directly accountable to more than one authority is a recipe for confusion.
As we agreed in June, decisions taken by the new European supervisory authorities should not impact on national budgets. In the forthcoming reform of hedge funds, private equity and derivatives, José Manuel Barroso, the European Commission President, and Mr Barnier will be mindful that Europe is not competing with itself, but striving for global excellence.
It is too simplistic to argue that financial centres in Europe are just competing among themselves. The reality is the real competition to Europe’s financial centres comes from outside our borders. And that London, whether others like it or not, is New York’s only rival as a truly global financial centre. No other centre in Europe offers the same range of services: banking, insurance, fund management, law and accountancy. It is in all of Europe’s interests that they prosper alongside their close European partners.
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Alistair Darling is Chancellor of the Exchequer
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