The Bankwatch

Tracking the consumer evolution of financial services

France fears backsliding on regulation

Ms Legarde was a bright star and clear thinker at the recent World Economic Forum.  There is not yet broad agreement on the methodology and priorities amongs the countries as to resolve the global crisis.

In another interview she offers some indication of how globalisation actually works, and the comparison of UK and US approaches is stark.  There is a long history between UK and France, and now is not the time to let that get in the way.

Transcript – Christine Lagarde – Finance Minister – France | ft.com

BH: Are they retreating in Washington and London?

CL: I cannot put my finger on it. It is latent, it is everywhere. And understandably so. Resuming lending is a priority and stimulating growth is an everyday objective because we want to maintain stable employment and stop the fall. But it is a question of a methodical approach. If we don’t start at the root cause of what started this crisis, then we are curing the symptoms and not necessarily the illness itself.

BH: Gordon Brown wants make the global economy the centrepiece of G20 rather than the regulatory agenda?

CL: I’m not denying that he has a very fair point about the co-ordination of economic policies. Alistair [Darling, UK chancellor of the exchequer] made a point in today’s Handelsblatt, and he’s right. I totally agree with him. We need much more co-ordination. Otherwise we’ll get back to the post-Asian crisis, where by diluting the message and retreating from the causes, we’ll be curing the symptoms.

BH: Has European co-ordination fallen apart after the initial bank rescue plan in October?

CL: I hope we can continue to have a line drawn between distressed banks and sound banks and that in any event we are mindful of distorting effects that could result from one approach rather than another. In that vein, the bad bank principle, to the extent that it pretty much protects the shareholders by holding bad assets separately to the normal operations of the bank, is a bit of a query.

In the main, we worked together on the same doctrine, prompted by the Lehman collapse and the Irish approach to protecting deposits in Ireland.

There is not always a lot of consultation.

In a separate interview:

She also chided Alistair Darling, the UK chancellor, who appealed for greater co-ordination in a German interview on Thursday. Ms Lagarde pointed out that whereas Tim Geithner, the US Treasury secretary, called his French counterpart before unveiling his financial rescue package this week, Mr Darling did not consult before going ahead with his latest bank bail-out package last month.

Written by Colin Henderson

February 13, 2009 at 12:58

Posted in Uncategorized

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