Brussels, 19/11/2010 (Agence Europe) - I am “confident” that the European Union will work with precision and rapidity to find a solution to the financial problems facing Ireland, explained the US deputy treasury secretary Neal Wolin, on Thursday 18 November, on a stopover in Brussels, adding that it was not for the US to dictate what route should be taken. He said Ireland and the EU have the right policies and instruments to help Ireland deal with the costs of restructuring its banks and the knock-on effect on public finance (see EUROPE 10259). Earlier this week, his boss, Tim Geithner, advised the eurozone to find a solution very quickly. Financial and monetary issues are on the agenda for the EU-United States summit in Lisbon on Saturday.
Bonuses. Wolin discussed international reform of financial regulations with EU Internal Market Commissioner Michel Barnier. Quizzed about bank bonuses, he said that the system had to be overhauled to avoid the encouragement of excess risk-taking. Pay should be set by the market and cannot be regulated to the every cent, he said in London. The EU has introduced binding rules on bank bonuses (see EUROPE 10233), but the United States only has guidelines repeating the ideas set out by the G20. During his most recent trip to the US, Barnier criticised the US authorities' lack of will to introduce binding rules, saying he thought that more could be done in the United States on bonuses, and adding that if nothing is done, it shows that we have not learnt the right lessons from the crisis (see EUROPE 10248). Financial institutions quoted on Wall Street have shelled out a record $144 billion in bonuses, premiums and stock options to their managers this year.
Neal Wolin said that the Dodd-Frank Act in the United States, and the various legislative initiatives in the EU, had made substantial progress in changing the bank capital and liquidity requirements, along with the rules governing derivatives and the restructuring of too-big-to-fail corporations. The key question now is convergence towards fair rules of the game, he added. He said that the US could be applying the Basel II bank capital requirements and also the new Basel III rules endorsed by the G20 summit in Seoul (see EUROPE 10255). He warned against any attempts in the EU to introduce rules on trade repositories for the derivatives markets, saying that the market should decide. (M.B./transl.fl)