Inquiring minds are reading details of a Speech by Joaquín Almunia Vice President of the European Commission responsible for Competition Policy on October 4, 2011.

Since 2008, people throughout the EU have been asked to accept the huge government bailout of the financial sector and to endure the austerity measures required to bring public finances under control.

These measures touch directly the lives of citizens; this is why I believe that we need to be as transparent as possible with them. And – of course – we need to do our utmost to make the most efficient use of public money.

It is crucial that we explain to our citizens why this aid was necessary to avert the collapse of the financial system. …

We are all aware of the seriousness of the situation and of what is at stake.

Of course, the control of the State aid given to the banks under restructuring is not the only task to overcome the consequences of the financial crisis.

The financial sector must be oriented – first and foremost – towards its core function of meeting the financing needs of firms and households.

To this end, the Commission is in the process of changing the regulatory landscape for the financial industry.

Recent steps include, among others, the proposals on capital requirements – the so-called CRD IV – and the European Market Infrastructure Regulation, or EMIR.

President Barroso also announced a proposal for a tax on financial transactions in last week’s State of the Union speech to the European Parliament. …

The Commission’s work has reduced the amount of taxpayers’ money that has gone to financial institutions and has addressed the moral-hazard issue.

Since October 2008, under the crisis regime, we have taken restructuring decisions on 25 banks and we have seen the orderly liquidation of 11 more. The only negative decision we had to take involved a small Portuguese bank.

At present, we are working on restructuring plans for another 21 banks and we cannot exclude that this number could grow in the near future.

The emergency package to rescue and restructure banks is temporary by definition. As soon as the crisis is over, the exceptional rules will disappear – and the sooner, the better.

I have said many times that, when market conditions improved, we would replace the crisis rules with the new rescue and restructuring measures that we have been preparing for some time now.

Only a few months ago, we hoped we could make the switch at the end of this year; we were ready for it. Unfortunately, the conditions on the markets have deteriorated again and it would no longer be safe to press ahead with that plan.

I will therefore propose to the College to extend into 2012 the crisis State aid rules for banks. Let’s hope that in the next year we will be able to come back to a normal regime of State Aid in this domain.

And in the meantime, let’s hope that markets will calm down; that banks will resume lending to the real economy; that growth will take again a sustainable path; that new jobs will be created again; and that the taxpayers will recover the resources they have been obliged to put on the table to prevent an even worse crisis.

Thank you.

The EC …

The most galling of all is this blatant lie “The Commission’s work has reduced the amount of taxpayers’ money that has gone to financial institutions and has addressed the moral-hazard issue.

If that is not enough to make you puke, nothing is.

Mike “Mish” Shedlock
Click Here To Scroll Thru My Recent Post List