Fri Oct 10th, 2008 at 07:36:12 AM EST
German federal finance minister Peer Steinbrück has a plan. On Wednesday, he published an eight-point plan (see in German, and in English as pdf), to be presented at the G7 meeting of finance ministers in Washington today. No word about nationalisation, but definitely about new regulation. Condensed summary:
- Obligation to keep innovative financial instruments on the balance sheet, and they must be supported with sufficient equity.
- Bank liquidity cushions must be increased, and a minimum size must be set for them.
- International standards should be created for greater personal liability for the financial market participants accountable (to prevent golden parachutes).
- Incentive and remuneration schemes should be adjusted in the financial sector (Steinbrück links those to the insane push for high profit margins).
- Closer coordination between FSF and IMF.
- Detrimental short-selling should be temporarily banned by international agreement.
- A ban on the securitization of 100% of lending risk (to make lenders aware of risk).
- Enhance cooperation between national regulators.
Just two weeks ago, Steinbrück, who is from the German Social Democrats (SPD), was all over the global media by declaring the end of US hegemony (as reported by Fran in the 26 September Salon):
FT.com / World - US ‘will lose financial superpower status’
The US will lose its role as a global financial “superpower” in the wake of the financial crisis, Peer Steinbrück, the German finance minister, said on Thursday, blaming Washington for failing to take the regulatory steps that might have averted the crisis.
“The US will lose its status as the superpower of the world financial system. This world will become multipolar” with the emergence of stronger, better capitalised centres in Asia and Europe, Mr Steinbrück told the German parliament. “The world will never be the same again.”
However, Steinbrück is no flaming leftie.
The fun thing about the person doing the proposal is that Steinbrück was a top advocate of market 'reforms' within the SPD. In 2003, back when he was PM of the German state of Northrhine-Westphalia, he co-authored a position paper advocating various 'subvention-reducing' reforms with the (now outgoing) PM of Hessen, the infamous Roland Koch (CDU). The Koch-Steinbrück-Papier is cited by 'reform' advocates as model ever since.
On the other hand, Steinbrück long advocated stronger international oversight. Remember when Merkel scolded the US thusly?
Merkel Slams US, Britain for Blocking Tighter Financial Controls | Germany | Deutsche Welle | 20.09.2008
Speaking in Austria on Saturday, Sept 20, Merkel said her government had tried in vain to win G8 support last year for tighter regulation of hedge funds and financial oversight of capital markets, hinting that she felt vindicated in her stance as a financial disaster unfolded on Wall Street in recent days.
"It was said for a long time 'Let the markets take care of themselves' and that there is 'no need for more transparency'," Merkel said at a rally in Linz, where she was campaigning on behalf of the Austrian conservative People's Party (OeVP).
"Today we are a step further because even America and Britain are saying 'Yes, we need more transparency, we need better standards for the ratings agencies'," Merkel said.
Those attempts by Merkel's government at the G8 were pushed by Steinbrück.
Now, more to the point: do you think these steps suffice to at least prevent another similar crisis?