REGULATION:EU COMMISSIONER Charlie McCreevy has said he is not to blame for the turmoil gripping financial markets as criticism mounts over his "light touch" approach to regulation.
He has also warned that there is no regulatory solution to the current crisis and the new rules that he is proposing over the next few weeks won't come into effect for two years.
"Nothing that anyone does now on a regulatory level will turn the turmoil taps off. There is no magic bullet solution or it would have come many months ago," said Mr McCreevy yesterday while announcing new proposals designed to promote future financial stability.
Mr McCreevy has come under intense pressure in recent weeks from socialist MEPs, who have strongly criticised his failure as internal market commissioner to pass new legislation to better protect the EU's financial system.
Last week, former Danish prime minister Poul Nyrup Rasmussen, who heads the Party of European Socialists, appealed to Mr McCreevy to perform a U-turn and regulate hedge funds and private equity groups.
"Commissioner Charlie McCreevy has got to respond, and respond positively. With millions of families worried about their savings and pensions, it would be very unwise to remind us that until very recently he believed that self-regulation was best," he said.
Mr McCreevy also faced tough questions yesterday over his suitability for the role of co-ordinating Europe's response to the turmoil given that the entire Irish banking system had required a government bailout after his own tenure as Irish minister for finance. One Italian journalist even suggested that he should be moved to the fisheries portfolio.
Mr McCreevy brushed off the criticism, saying he had designed the current regulatory structure in the Republic, which worked well by keeping "all players in the loop".
"I didn't bring in the supervisory system in the UK, and that seems to have banks in trouble. I have no responsibility for the German, Belgian or Netherlands system or the Italian system. So I don't think any actions of mine have contributed to the present financial crisis," said Mr McCreevy.
He also dismissed calls to regulate hedge funds, noting that the current crisis originated in the already closely regulated banking sector.
Mr McCreevy is proposing to amend the EU capital requirements directive to restrict the amount of money banks can lend to one party; improve supervision of cross-border banking groups by improving co-operation between national supervisors; and tighten the rules on securitised debt, where repayments depend on the performance of loans.
The proposal on securitised debt would force the banks that repackage and sell these types of loans to retain ownership of at least 5 per cent of the securities. Earlier drafts of the proposal had set the limit at 10 per cent but this figure was reduced after consultation with the banking sector that was concerned it would limit its options in the sector.