Europe calls for global response to credit crisis

BRUSSELS – Europe needs to “inject credibility” into its efforts to tackle the current financial crisis, the EU Commission president said yesterday, as a major US banking bailout hangs in the balance.

European governments have moved fast in recent days to commit billions of euros to rescue struggling banks within their own countries – sometimes moving jointly even though there is no EU-wide action plan for banks that operate across several nations. “We are asking and urging member states for closer co-operation.It is critically important for confidence in the markets,” said EU Commission President Jose Manuel Barroso.”It’s not just a problem of injecting liquidity, we also need to inject credibility in the European response.”He said the banking meltdown was now “most likely” going to impact on the wider economy – and governments had to think long-term on fixing the financial system to restore stability and confidence.”The real economy is now under very severe pressure,” he said, calling for a global response to deal with a crisis affecting financial markets and economies around the world.Barroso said European Union regulators were ready to put forward specific plans to improve banking supervision in Europe, to set new rules to value complex banking assets, improve the consistency of deposit guarantee schemes and make executive pay more transparent.”We are in a situation where only with a co-ordinated action from all those involved we can restore confidence in the markets,” he said.”We must first of all address urgencies and then make our structures future-proof.”Banking shares have plummeted following Monday’s failure of the US senate to vote through a US$700 billion plan to buy up bad debt from banks and unfreeze lending.Traders also lost confidence that many European banks could cover their debt or absorb huge losses racked up from high-risk investments based on US housing loans.Stock prices only recovered after European governments moved to shore up banks by injecting them with large amounts of money.Angel Gurria, secretary general of the Paris-based Organisation for Economic Co-operation and Development, or OECD, suggested European nations might have to consider a joint bailout plan similar to the massive US plan.”Considering the exposure of European financial institutions, we might have to start thinking of a systemic plan for Europe if things don’t improve on the other side of the Atlantic,” Gurria told European lawmakers in Strasbourg, France.”The piecemeal approach may not work in Europe either.””The situation is indeed critical.We are facing the worst financial crisis since the Great Depression and its consequences are already spreading beyond the financial sphere, throughout the globe,” he said He called on the OECD’s 30 member nations to “draw up lessons and conduct a major debate on the necessary reform of the international financial system.”Gurria said the EU, United States and others had to learn from the flaws of the current financial system, notably allowing banks and lenders to hand out “ninja loans,” – short for “no income, no job, and (no) assets” – which Gurria said had to end.Nampa-AP”We are asking and urging member states for closer co-operation.It is critically important for confidence in the markets,” said EU Commission President Jose Manuel Barroso.”It’s not just a problem of injecting liquidity, we also need to inject credibility in the European response.”He said the banking meltdown was now “most likely” going to impact on the wider economy – and governments had to think long-term on fixing the financial system to restore stability and confidence.”The real economy is now under very severe pressure,” he said, calling for a global response to deal with a crisis affecting financial markets and economies around the world.Barroso said European Union regulators were ready to put forward specific plans to improve banking supervision in Europe, to set new rules to value complex banking assets, improve the consistency of deposit guarantee schemes and make executive pay more transparent.”We are in a situation where only with a co-ordinated action from all those involved we can restore confidence in the markets,” he said.”We must first of all address urgencies and then make our structures future-proof.”Banking shares have plummeted following Monday’s failure of the US senate to vote through a US$700 billion plan to buy up bad debt from banks and unfreeze lending.Traders also lost confidence that many European banks could cover their debt or absorb huge losses racked up from high-risk investments based on US housing loans.Stock prices only recovered after European governments moved to shore up banks by injecting them with large amounts of money.Angel Gurria, secretary general of the Paris-based Organisation for Economic Co-operation and Development, or OECD, suggested European nations might have to consider a joint bailout plan similar to the massive US plan.”Considering the exposure of European financial institutions, we might have to start thinking of a systemic plan for Europe if things don’t improve on the other side of the Atlantic,” Gurria told European lawmakers in Strasbourg, France.”The piecemeal approach may not work in Europe either.””The situation is indeed critical.We are facing the worst financial crisis since the Great Depression and its consequences are already spreading beyond the financial sphere, throughout the globe,” he said He called on the OECD’s 30 member nations to “draw up lessons and conduct a major debate on the necessary reform of the international financial system.”Gurria said the EU, United States and others had to learn from the flaws of the current financial system, notably allowing banks and lenders to hand out “ninja loans,” – short for “no income, no job, and (no) assets” – which Gurria said had to end.Nampa-AP