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ICMA and EU Commission face-off in blame game for financial crisis

Thursday 10 June 2010 - by Nicola York

Outgoing European Commission deputy director general for DG Markt David Wright came to blows with International Capital Market Association chairman Hans-Joerg Rudloff over whether regulators should take some responsibility for the financial crisis.

Speaking at the ICMA annual conference on 27 May in Brussels, Rudloff said that banks had accepted their part for blame in the financial crisis but that supervisors and regulators had not.

Rudloff said: “It is not the lack of regulation which was important. It was the regulators themselves who didn’t apply it. I am not someone who has argued against regulation. I have always argued for stronger regulation. What I flatly reject is that here is an impression that has been created on the political and regulatory side that the only ones who caused the crisis are the banks. It is just not so.”

Wright disagreed and said it is “too easy” to say that the banking industry has been well regulated.

He said: “Don’t forget please that no less than 13 per cent of GDP has been devoted by EU Governments in the form of guarantees and recapitalisation to sustain the banking system and avoid systemic collapse.



“I’m sorry, I just don’t buy it. And I think that is why the world’s regulators including the G20 and all the financial institutions are just dissatisfied about the current level of banking regulation. So I’m afraid there is maybe a big philosophical difference between us on that point. I think the economics are on my side and I don’t think they are on your side.”

The Committee for European Securities Regulators chairman Eddy Wymeersch also weighed into the debate saying: “If the industry knew so well why did they not act? Why did the boards not act when they saw the developments in Northern Rock and the others that were clear. When you saw that the risks were piling up because CDOs were being bought with central bank money, why did nobody act?

As a regulator you should not substitute yourself for the bank. You can apply the rules, but as a substitute would mean you were also responsible for the bank and that does not help.”

Rudloff added: “If anything you can say the banks are there to make money. Yes they should protect their shareholders, yes they should do it in a prudent, yes they should protect their deposits. But the regulators are there to regulate and they are there to enforce or not to enforce, and they are there to implement or not implement. The banks have accepted their share of the blame.”


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