New York Stock Exchange
Minister of Finance De Jager speeched at the New York Stock Exchange.
Ladies and gentlemen,
It’s always a little daunting to be in a room with so many CEO’s and CFO’s. I think if you put your minds to it, you could collectively run the planet. Actually, there are some who think you do. But we all know that’s not true.
So here we are, a group of experts on the subjects of management and money. But despite your expertise, our system seems to be in turmoil. The credit crisis has not only laid bare the vulnerability of our financial system, but also the complexity of it. Next month the Dodd-Frank financial reform bill – which contains the Volcker Rule - will go into effect here in the US. I had a great talk with Paul Volcker yesterday. I told him I subscribe to his viewpoint on banking reform and that we are looking into similar regulations in The Netherlands.
In the UK, Mr. Vickers has led the Independent Commission on Banking and the European Commission has formed a special committee. In the Netherlands a similar legislative initiative is underway. Both are research reforms in the banking system. But we need a more robust financial sector. Therefore, we need stronger banks, with more equity. If - and when - a bank does get into trouble, we need to be able to settle quickly and separate the vital banking activities so these can continue without a hitch. However, in finding a solution and preventing future financial disasters, we must be careful not to create a second complex system.
A complex system of too many regulators, too much paperwork and of little effect. Mr. Volcker himself was quoted in the New York Times last year as saying he would like – quote - “a much simpler bill, I’d love to see a four-page bill that bans proprietary trading and makes the board and chief executive responsible for compliance.” – end quote. I agree. Obviously, having created a European common market, we strongly believe in free trade. Businesses should be encouraged to be bold, to explore and to innovate.
No one wants to curb the freedom of free enterprise.
No one wants to cut off the oxygen supply to the business community.
No one wants to stop the good stuff from happening.
What we do want to do, is prevent the bad stuff. You have a big responsibility. Your decisions and actions, affect a lot of people. Some say money makes the world go round. We know what they mean. But let’s not get carried away. You do not run the planet and neither do I. You run businesses and I guard policy and government finances back home. And yet the financial sector did spin out of control. We need to run a tighter ship. I intend to do that, no more, no less!