EU Comissioner Barnier to EuroFora:Market/Rating Agencies Regulation,Solidarity+Rules=People's Trust

*Strasbourg/EU Parliament/Angelo Marcopolo/- It's when all that is required, Financial Markets' Regulation, from Swaps to Rating Agencies etc., in parallel with EU Solidarity and respect of agreed EU Rules, will be concentrated all together, that Trust will be restored in EU Citizens and People all over the World , stressed to "EuroFora" the experienced, long-time EU Commissioner, and three times Minister, (including of Foreign affairs), Michel Barnier, just after EU Parliament voted a 1st piece of Regulation (on Swaps) while EU Commission's collective body adopted a Legislative package on controversial Rating Agencies' behavior, aiming to ensure that they work properly, without dependency, but with more Transparency, Pluralism and crystal-clear procedures able to prevent abuses.
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- "It's true that Financial Markets were let to get too much Power, during the latest period, and some probably started to think that they could do anything they liked", but "Pëople are Right when they Revolt against that", since "what is at stake is for Democratic Politics  and People's Sovereignity to get back at the 1st rank, since Rating Agencies, in fact,

   - We (EU)don't want to break down the Thermometer, but we need that it works properely and correctly, f.ex. without pushing Fevers' numbers to excessive, unreal levels", Barnier added later, speaking toi Strasbourg's Journalists, including "EuroFora".
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- "Concerning, precisely, EU Citizens, considering what is going on in Greece, Italy, etc., (where democratically elected Politicians seem remplaced by Technocrats from a Financial establishment, including U.S. Agencies as Goldman Sachs, etc), don't you think that some Assurances should be given to the People, also thanks to what you are doing today on Rating Agencies' regulation, etc., if eveything goes well ?", "EuroFora" asked EU Commissioner Michel Barnier, while more social troubles were notoriously foreseen both in the above mentioned countries as well as in the USA during the forthcoming Days.

=> -  Indeed, "this is a Package of Rules which aims (also) to convince EU Citizens, who are concerned, sometimes even Angry, that we (EU) understood the Lessons given by this (Global) Crisis, the Financial Crisis, the Crisis of the Sovereign (States') Debt", the competent EU Commissioner replied to "EuroFora"' from the outset.

+  Moreover, both "for Greek and all other EU Citizens, they can see that there is also European Solidarity, as f.ex. with the Plan anounced by the EU Council" last October 2011, "which reduces the Debt of Greece and provides Financial Support, requiring also Discipline", he added.

=>  - "So that Solidarity and Rules should enable us (EU) to Restore Trust everywhere it's needed", Barnier's response to "EuroFora"s question concluded on the substance.
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+  "I don't think that there is any risk" in the recent Government Changes in some EU Countries. "There are also other Changes f.ex. in Denmark, in Portugal, in Ireland, etc, and its' normal for Leaders to change positions, since democratically elected Parliaments keep the final word on any Government's acts, composition and duration., Barnier added later-on.

- "F.ex. I know personally well Mario Monti (the new Italian Prime Minister) : We were sitting side by side in EU Commission for more than 5 Years" in the Past. "He's a great Economist, who made the choice of Public Action when he became (EU) Commissioner. And I'm no a Technocrat, I'm a Politician", stressed the man who was Elected several times as former MP, Region's President, 3 times Minister, etc. well known also in French National Politics. "Monti was a Respected EU Commissioner for 10 Years : That's not exactly being Technocrat, and, at any case, he will also be confronted to the Italian Parliament's vote".

- Indeed, "Politicians must keep the Power", clearly underlined Barnier. "We may, sometimes, appeal to Technocrats,  I'm also surrounded by Experts, various qualified individuals who help me in my work", but that's another, differend issue. "As for Italy; and any other Country, (f.ex. Greece), we are in a Democracy : There is a President of the Republic and a Parliament, and the Italian designate Prime Minister (Monti) will be submitted, several times, to the Vote of the national Parliament", he pointed out.
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+ Questioned also by another French Journalist on the risk for "the People to revolt, given what they are suffering", several times because of blunders and/or abuses by the Financial system of the Past, Barnier strongly replied that "I think that the People are Right when they Revolt, when they are seriously Concerned by what they've seen during the last 3 Years", (i.e. since the 2008-2009 Global Crisis, notoriously started in the USA), "or even since 15 years, which was really Ludicrous :"

- "They saw the Financial Sector entirely free to do whatever it wanted, f.ex. win Millions $ of Profits with a total Absence of political Morality, by Financial Markets which worked only for their own Selfish interests, instead of working for the real Economy, etc. But now, we (EU+G20) adopt a Firm attitude, saying that there are Principles and accurate Laws, some of which have already started to enter into force, in order to put the Financial Sector in the service of Businesses and of the (real) Economy : That's what must be done", Barnier stressed.

- "Then, angered Citizens would understand that, on EU level -which is the only one to be really good for that kind of action to be Efficient, on the condition that an initially Monetary only Union becomes also a fully-fledged Economic Union - People can be Protected  if they are good Europeans", i.e. accept to play according to the Rules of the EU collective game.

- However, as far as I'm concerned, "I am not Angry, I am Acting !", strongly underlined the experienced Barnier. marking with a gesture showing resolution his replies to Strasbourg Journalists' questions.

- "That's more Efficient, because I have the Power to Act. I wanted to become (anew) EU Comissioner, thanks to the Trust of (French) President Sarkozy and (EU Commission's) President Barroso, in order to come there where it's necessary to act in oder to face certain Global Threats and Risks", "convinced that Europe has an Economic Model refocused on a  Competitive, Social Market Economy, where every Word has its Meaning, illustrated in Transparent, crystal clear Rules", he concluded.
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- "I hear Threats, informations, or Fears, but I'm not going to be impressed by such campaigns of Lobbying", because "I have a crystal-clear Mandate, which was determined at the Highest Level in the World : by the "G-20" (Heads of State/Governments' Summit, earlier this month at Cannes : Comp. "EuroFora"s NewsReports from the spot), which asked a Regulation of the (Financial) Rating Agencies in the USA, in Europe, in China, everywhere in the World : It's an obligation which is imposed to us (EU), and I work for the General Interest", the competent EU Commissioner stressed.

- "The overall aim is that at the end of the road, which mustn't take too long, there is No Financial sector, including particularly the Rating Agencies, and No Financial Product,  without an intelligent and efficient Regulation : We owe that to our (EU) Citizens who don't have a short Memory since the moment which triggered the recet Global Crisis",  Barnier reminded, obviously concerning the Lehman Brothers' unforseen, sudden banqueroute which cought the Rating Agencies by surprise in the USA..
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=> What counts most is that "it's good when Political Sovereignity is confirmed as more Important than Markets' Sovereignity : We (EU+G20) are working on that : In Future, Financial Markets won't escape, no more, to Regulation", the Senior European Politician stressed.

- "The Time of Democracy may take longer than that of Markets, particularly when they move at a Speed of Nano-Seconds.., while Political decision-makers have to Debate, agree with Parliaments, etc. We are Regulating Markets through Political processes. But the Decisions of EU Summits prove that there is a Strong Political Determination there", the experienced Barnier observed.

- "I recognize that Markets are Powerfull, too Powerfull, so that Politicians must react, - as f.ex. started to do the "G20" SUmmit of Heads of State/Government, particularly at the initiative of (French) President Sarkozy, - starting to Learn the Lessons given by the (Global) Crisis since 3 Years ago : What we (EU) are doing now, is just to realize what was said : f.ex. to set up Rules of (Economic) Governance, for Transparency, and in order to boost Morality there where it doesn't seem to exist."

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=> This goes through the Rules that we are setting up, including,  F.ex. the principle, -adopted Today by EU Parliament and which should  enter into force very rapidly-, that there shouldn't be Swaps for Sovereign (States') Debts, or the Monitoring of Rating Agencies which is already operational since the 1st of January, etc.

- "There are certain Measures which aim to Rectify an error, find Solutions to Problems already provoked in the Past, and some of them might, indeed, have been delayed, as well as Measures which aim to Anticipate, i.e. prevent problems from arising in the Future, and they are coming normally before any such eventual events.F.ex. when we create a Monitoring Authority in Europe for Banks, Financial Makets, Insurances, etc. which has the Power to take Decisions in order to Anticipate, so that  they can move raidly, even before any such events.
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 - "In an Economy, we need to know the Rules and the Risks. That's what are due to be doing the Rating Agencies, concerning Businesses and States. We need to know the reasons of a "fever", of a difficulty. But that means that those who Measure the Risks, take the temperature, work Correctly". So, "our aim is Not to Break the Thermometer, but, on the contrary, to ensure that it works properly, that it takes the temperature at the Right Moment, and that the Thermometer doesn't ..augment the fever : That's what we want to do", resumed the competent EU Commissioner, speaking after a brief Press Conference, much more freely and longer with a group of Journalists in EU Parliament in Strasbourg, including "EuroFora".

- "We need Rating Agencies which are working properly, currently there are only 3 big for the whole World, something which obviously is not enough, and I'd also like to reduce Dependency on (RA's) Notices, because there are too many regulations on Banks, Insurances, etc., where references to (RA's) Notices is systematic, automatic. I want to reduce that. So hat we can have More Rating Agencies, with Less Dependency, which Rotate during Time, so that those who want Notices regularly would change Rating Agency from times to times. Moreover, (RA's) Notices should observe some very precise, specific Rules, particularly when they touch upon States, because this affects the Lives of Citizens, who are also Tax-payers", he added, giving an overall view of EU Commission's adopted Legislative Draft in a few words.  

- "I don't think that Rating Agencies really want to Fail in their Job", and "I don't care about Lobbying", because "I work for the General Interest" of EU Society, with all Market Actors, according to my RoadMap, which was decided by EU Council and by the "G20" Heads of State/Government Summits". Particularly, "after the (Global) Crisis, we don't have the right to drop our Map, because Citizens have no Road" to get peacefully out of the Crisis' consequences; he warned.
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+ Replying to a collegue's Question on "Rating Agencies' Monopole", Barnier observed that "there are really Few Rating Agencies : Only 3 Big for the whole World, and that is obviously Not Enough. That's a real Problem : There is No Diversity, Not enough Competition, and, at the same time, there is a Dependency", he denounced.

=> "That's why, we (EU Commission) decided, f.ex. to  reduce a previously systematic Dependency on Rating Agencies, so that Banks, Insurances, etc. may also do their own Risk Evaluations". And "we (EU+G20) have the Right to ask from these Rating Agencies, which are Private but play a kind of Public Service (General Interest) role, with very important Consequences on Businesses, a country's Economy, States and millions of Citizens, to be more Transparent, and publish, f.ex. the reasons for which they might downgrade, or not, the rating of States.
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* "Europe cannot accept to be downgraded into a kind of Sub-contractor for the USA or China, etc. EU is Sovereign !", the experienced, twice EU Commissioner and 3 times Minister (including on Foreign Affairs), strongly stressed.

In particular, "Financial Markets shouldn't intervene in the internal affairs of States, to the point to even impose this or that leader : "They (Markets) had become too Powerfull", because "we had left them too much liberties, during the great Wind of Globalisation, which has had also its positive aspects, f.ex. with the Emerging Countries being favorable to a Democratisation of Global Governance. But (Global) Markets usurpated all liberties for them, acted as if they were allowed to do anything, since 15 years. But, now, this is Over ! It has ended at least in Europe, and soon to the rest of the G20. Even in the USA, we observe that the Economy Minister and the Congress are, apparently, starting to move in a similar direction, he pointed out.

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+ "I'm not an Ideological but a Practical person : I want to have the conclusions of this Crisis, during which some Actors, mainly Financial, committed several Errors". F.ex. Banks, but mainly Rating Agencies" : Because " we saw, f.ex. 3 Years ago" (i.e. durig the Global, USA-born Crisis) that they could rate as "perfect" even some "Toxic" products, or give a Positif appraisal for Banks at the eve of their Banqueroute !", as he reminded critically.

- Nevertheless, "Rating Agencies are something very Important. The point is for them to work correctly. It's not about opening fire against the messenger. It's not about breaking the Thermometer. In any Economy we need Competent People to make serious Evaluations of eventual Risks in all activities. ..

 - But, "there is a Real, Big Debate opened between the Power of the Market and Political Power"  : "We must rebuild a Political Sovereignity, in order not to suffer from Market's Sovereignity" , the experienced, twice EU Commissioner and  times Minister (including on Foreign affairs), strongly stressed.

- "That"s why, step by step, week by week, we are progressively but systematically proposing New Regulations on this issue, also in application of the G 20 Summit's conclusions", he observed, promissing to "Complete (his) Work towards the End of November - early December" by adding the last, remaining pieces of the desiredf Legislative edifice, including "rules on how to deal with Banks' Crisis".

    => Indeed, 2011 "G 20" Summit in Cannes (France) concluded by recalling the fact that, already "in Washington in 2008, we committed to ensure that all Financial Markets, Products and Participants are Regulated or subject to Oversight, as appropriate"

    >>> "We will Not allow a Return to the Pre-Crisis behaviours in the Financial sector, and we will Strictly Monitor the Implementation of our Commitments regarding Banks, OTC, Markets and compensation practices", G20 Heads of State/Government stressed. (Comp. "EuroFora"s NewsReports from Cannes).

    Also, "we have agreed on Principle sto protect Financial Services' Consumers", "submit G-SIFI's to Strengthened Supervision", "decided to develop Regulation and oversight of Shadow Banking", "develop further our Regulation on Market Integrity and Efficiency", "Assess the functioning of Credit Defaults Swaps markets", "Systematically Identify systemtically important non-bank Financial Entities", "Reform the FSB to improve its capacity to Coordinate and Monitor our Financial Regulation Agenda", etc., the collective, official G20 Conclusions stress.
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    ¨+ Meawnhile, "EU Parliament adopted today a Regulation on Short Selling and Credit Default Swaps on Sovereign Debt, which are normally prohibited, as I had proposed on September 2010", Barnier noted (See other, relevant "EuroFora"s NewsReport on this specific issue, published earlier troday).
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    Now, on Rating Agencies, "the Key issue is mainly to diminish the automatic use of (RA's) notices, which will no more be obligatory for Banks, Insurancies, ad other Financial entities, etc. But another obligation is to "Rotate", i.e. to change Rating Agency at least in each 3 Years, for another way to evaluate possible risks. We (EU) add Transparency in Methodology : f.ex. when a Rating Agency evaluates a State, it will be obliged to speak with its Government, at least 1 Day before to Publish its Notice, in order to exchange views, as well as to publish all its Report and all the elements of information it uses".

- "Rating Agencies have got too much Influence, which spreads throughout all the Financial System. We need Agencies, I'm not shooting at the Messenger, because we need Messengers who do Correctly their job. But RA's (sometimes excessive) influence must be relativized".
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    In particular, "on Rating Agencies, we worked on 5 Proposals, which have all been endorsed by EU Commission's college today", and are "needed in order to help Rating Agencies work well, because their Credibility is at stake", the competent EU Commissioner observed :

    - "No 1, the principal issue : Reduce Dependency on (Rating Agncies') Notices". i.e. suppress or diminish Automatic References to (RA's) Notices", which are "sometimes excessive"  +"We (EU) also asked from all Financial Institutions to do their own Risk Evaluations", f.ex. Banks, etc., and address themselves to Rating Agencies only as ultimum remedium.

    - "No 2, set more strict Rules for (Rating Agencioes') Notices on Sovereigns (States' debts), as, f.ex. : More Regular 6 Months' periods for Notices, instead of 1 Year, as it stands now ; Publication before Markets open ; a Better Quality of information given ; and "more Transparency", f.ex. with the full publication of Reports, which is also useful for Investors, and of all Data it used in order establish that Notice : Concerned Governments should be warned 24 working Hours before Publication, so that a Confrontation of views, a Debate can be held between the Rating Agency and the State involved, which may have f.ex. Supplementary Data to provide before that Publication ;  etc".

    - "No 3, the Diversity of Notices, the Independence of (Rating) Agencies, avoid Conflict of Interests, etc.", where "we (EU) take some crystal-clear Measures : F.ex. a Stockholder having at least 5% in an Agency's capital will not be able to hold also more than 5% in another Rating Agency" ; the Prohibition to edit Notices for businesses owned by a Stockholder having more than 10% in the Rating Agency concerned ; Rotating rules of maximum 3 or 6 Years , if you're noted by a (Rating) Agency ; an Obligatory Notation for "the most complicated" Financial products", etc., he anounced.

    - "4rth point, that of Transparency and Comparability of (RA's) Notices : F.ex. "we are going to create an Index for all Notations on a product, which will also help Smaller Rating Agencies who do a Good Job but have difficulties to make it known" to a wider public, Barnier observed, as well as an Integrated Index for all, Harmonized and classified Notices, useful to Investors, while also "any Methodological Change" by a Rating Agency "should be validated by the Market's Authority", etc.

    - "5th point, the creation of a European system of civic Responsibility in case of Intentional Violations, or Heavy Negligence vis a vis the (EU) Regulation, with a possibility to go to the (EU) Court (of Justice), as well as a reinforcement of Sanctions"; Barnier added.

     This overall "Tool Box",  "has been asked also from other Contrinents" in the World by the (11/2011)  "G-20" Summit of Heads of State:Governments from Cannnes, (Comp. "EuroFora"s NewsReports from the spot), whose RoadMap I'm following and implementing with the above-mentioned Measures, the EU Commissioner concluded. (See supra).

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+ Further Measures continue to be studied, and may emerge during the Legislative process :
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    + In parallel, we continue to be working on an initially considered Measure to give to the Independent Authority of EU Markets, ESMA, the power to Suspend  (f.ex. for 2 Months) RA's Notices for Countries under Financial Supervision Programs, which was postponed for a more adequate occasion, in order to better shape its technical implementation : It concerns Notices (by RA) which suddenly pop up just at the eve, or at the last minute, without any warning, nor any explanation, when Aid Programs were going to be announced on some Countries, such as Greece, Portugal or Ireland, provoking undue Instability.

    But we (EU Commission) shall come back later on that, as well as EU Parliament and/or EU Council may do, he warned. (See also infra). In particular, we must make sure that such an eventual Suspension; for a short period of Time, intervenes in such concrete circumstances that it wouldn't harm at all, but only support the Calm needed in order to really Help any Country ready to be supported by the EU, and that's also a "Technical" matter which needs some further work, he noted.

    ++ Another issue on which we'll pursue our analysis, in order to complete our proposals on some practical aspects, is that which was raised by a recent "Error" of Standard and Poor's", which was denounced by the competent EU Commissioner as "very Serious" :  F.ex. a notorious "Error", as Standard and Poor's acknowledged itself recently, on France's AAA rating, that it rectified shortly afterwards. Barnier called "everyone to be very Careful, in front of Markets' volatility, and particularly Rating Agencies".

    - "If I understood well Standard and Poor's explanations, they sent an erroeous Notice to certain actors only, who had subscribed  to a kind of early information system, paying a fee", he observed. "But this means that some Market players are informed before the Markets themselves, and even before the State which is rated by an Agency : Something which looks Problematic", particularly "from the point of view of a possible markets'" Manipulation", and/or Speculation on sovereign (State) debt, on the basis of a "privileged" information, on which I'll take a closer look", having asked from our Legal Services to see if such practices need a Regulated Framework", he warned.

    +++ Last but not least, "even if I''d welcome the Fusion of 2 or more Small Reting Agencies in order to create more Big Players in a World which hasn't but only a few of them", there is also another proposal on the pipeline, concerning a possible restriction of any Rating Agency's move to take more than 20% in EU's marketplace, on which we (EU Commission) intend to prepare complementary work", he added in reply to a brief question by a journalist from the USA.

    These last ideas are interesting, but not of an importance as great as that of all other 5 Measures which were adopted, because we have also various alternative possibilities to check Rating Agencies' Diversity and Transparency, he explained.
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    At any case, "EU Parliament; and/or EU Council may always not only agree, but even Strengthen further anyone amo,ng my official Proposals, as we saw, f.ex. Today, when MEPs adopted both my Draft on Short Selling and Swaps, and an  Addition excluding, in princile, Swaps on Sovereign (State's) debts, that I welcome", Barnier warned also for the forthcoming Future, as far as a possible interplay with MEPs and/or EU Member States' Governments is concerned "during the (EU) Legislative process"..

    + In fact, "EU Commission always keeps its Legislative Initiative : So that I can, at any moment, if the complementary checks are positive, (See supra), and if the Collective college (of EU Commissioners) agrees, re-insert in the process anyone among those supplementary proposals currently under consideration, and/or several MEPs, who also have the right to present their Ideas, may decide to table relevant Amendments, the experienced EU Commissioner observed, in reply to an Italian Journalist's question.
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    + Asked, precisely, about various MEPs' reactions, who support the "establishment of a European public Rating Agency", f.ex. in the form of an independent Foundation, Barnier sharply replied that "we (EU) must act Fast and be Quickly Operational" :

    - On the contrary, "I've been told that such an EU  Foundation or public EU Rating Agency would take Time to establish and would cost something about 300 or 500 Millions €, which aren't yet available right now for that purpose". Naturally we could do that, later on, but "we (EU) would always have to answer to the possible Objection that noone can be at the same time Judge and a Party".. Moreover, "what is more interesting, isn't to have just 1 EU public Rating Agency working well, while all the others would stay as they were until now, but, on the contrary, what I want most of all, is that ALL existing Rating Agencies start to work Correctly and Seriously, thanks to efficient Regulatory Measures", the competent EU Commissioner explained.

    - At any case, "MEPs and other People who currently support the idea to create a European Rating Agency, can always continue to promote that view, since it might really happen, at one moment or another, particularly if some people decide tro create, in Future, a kind of European Foundation, in order to have a supplementary Tool on Rating Agencies in the EU", Barnier suggested for any eventual private/Public initiative to meet that need. F.ex., "I'd like for some work to be done into bringing together some Small or Medium Rating Agencies to fusion and create a Bigger one, since we already have in Europe many Small RAs, which could group their forces together, in order to create a Stronger Rating Agency" in Europe, he observed, pointing at a, obviously interesting and practical perspective.

    - "But, what interests me, more than anything else, is that not only one, but all Rating Agencies in Europe must have a Legal Framework, respect the same Rules, f.ex. are obliged to be Transparent, to Rotate, etc., (comp. Supra), and when they deal with a Sovereign Debt, to hold a Debate with the State involved", Barnier resumed.