U.S. Fed Official: Time for regulatory “housecleaning”
BRUSSELS (March 25, 2011) – In the opening panel at Brussels Forum on Friday, Richard Fisher, president and CEO of the Federal Reserve Bank of Dallas, said that existing financial regulations are “based on a model that no longer exists. We need to adjust policies to reflect the current model.”
“The world has changed. Mao is dead. We won the Cold War,” he said. “I’d like to say that we went from mutually assured destruction to mutually assured competition. We have to learn how to compete.”
Fisher was speaking at the sixth-annual Brussels Forum, a conference on transatlantic relations attended by heads of state, officials from the EU institutions and member states, U.S. officials, Congressional representatives, Parliamentarians, and academics. Brussels Forum is organized by the German Marshall Fund of the United States (GMF), with major support from the Federal Authorities of Belgium, the Egmont Institute, and Daimler. Additional sponsors include the European Union Delegation to the United States, Deloitte, BP, BNP Paribas Fortis, and the Ministry of Foreign Affairs of Poland.
Appearing on the same panel were U.S. Senator Mark Warner, Polish Minister of Finance Jacek Rostowski, and Wilfried Porth, Member of the Board of Management at Daimler AG. The panel also addressed possible solutions to the ongoing economic challenges.
“The problem is not access to capital,” Fisher said. “Now the tanks are full. We need to figure out how to turn on the engines.” He went on to emphasize that “excess liquidity leads to excess volatility” and so the responsibility for continued recovery lies with legislators and regulators.
Senator Warner echoed Fisher’s comments, saying that government has used the stimulus “bullet,” now the challenge is to encourage the private sector to use the $2 billion in their available assets. He went on to say, however, that while “capital is available for large cap” companies, it’s harder for mid- and small-sized companies to access.
With regard to the need for increased fiscal responsibility, Rostowski encouraged cuts in social programs. “In Europe, there has been no thought to limit on social programs,” he said. “We can no longer afford the sorts of social legislation that have built up over time.”
Porth said that deregulation needs “to be faster, more sustainable. At the end of the day, it’s companies that create jobs.”
European Council President Herman Van Rompuy opened the conference with remarks that addressed both the current eurozone challenges and the turmoil in the Arab world. He said that in the 12 months since the last Brussels Forum, the workings of the eurozone had fundamentally changed, including Friday’s adoption of the euro-plus pact. “The eurozone can work,” he said. “Examples from the 18th century can’t convince me otherwise.”
With regard to North Africa, Van Rompuy said that events in the past months don’t fit with expectations that developed after September 11, 2001. “The uprisings in Tunisia, Libya, and Egypt have nothing to do with fundamentalism,” he said. “We are witnessing an episode in the fight for freedom.”
The evening finished with European Commission President Jose Manuel Barroso, who praised the European Union’s handling of the currency crisis. “We have proved wrong those who doubted our determination to do whatever it takes to defend the euro,” he said.
The conference continues through Sunday.
Brussels Forum is an annual high-level meeting of the most influential North American and European political, corporate, and intellectual leaders to address pressing challenges facing both sides of the Atlantic. Participants come from 50 countries, and include heads of state, senior officials from the European Union institutions and the member states, U.S. officials, Congressional representatives, Parliamentarians, academics, and media.
Brussels Forum is organized by the German Marshall Fund of the United States (GMF), the Federal Authorities of Belgium, the Egmont Institute, and Daimler. Additional sponsors include the European Union Delegation to the United States, Deloitte, BP, BNP Paribas Fortis, theMinistry of Foreign Affairs of Poland, the Ministry of Defence Republic of Latvia, Centre of European Studies, European Liberal Forum and the Japan Foundation Center for Global Partnership.