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The Hot Seat: Wolf Klinz

Wednesday 9 June 2010 - by Nicola York

 In the Hot Seat this month is Wolf Klinz MEP and chair of the European special committee on the financial, economic and social crisis. He talks about the need for Europe to speak as one voice on the global stage and what will be in the forthcoming final report of the committee

How does the committee work?

“This is a special committee, it is not a standing committee. It is not legislative in nature. In other words all the recommendations that we will come up will have to go then from a procedural point of view through the standing committees. But the advantage of not being a standing committee is that we can take a bold approach. In other words we can say what we consider to be right even if we do know that the chances that this will be implemented within six to 12 months may be minimal. If we think it is right then we will say so.”

What will your report say caused the crisis?

“You cannot point to one and say it has been the American banks or the investment banks, or the credit rating agencies. It is really a very rare combination of many factors that unfortunately did come together and that caused this situation. It was the social policy in America that wanted everybody to have his or her own house or apartment whether they could afford it or not. There was a lax credit policy followed by the banks. There was a very aggressive lending. There was a lax monetary policy. There were the innovative structured products, there was the securitisation, there was the poor work of the credit rating agencies, there was the greed of the investors throughout the world but particularly in Europe that bought into these structured products. There were inefficient supervisors, particularly in Europe, special purpose vehicles, the pro-cyclical effects of Basel. There were thousands of reasons.”

What do you think of the global reaction to the crisis?



“The reaction was swift and focused. But let’s be honest, it was not extremely well coordinated. The US did what they considered right. The UK did their part. Germany, France and so on.”

What is the result of this?

“We have more differences than before. Some countries’ banks are partly being nationalised, others are no longer. We have competitive distortions as a result of those interventions that we have to eliminate again. It is not quite clear how quickly we will be back to a level playing field. We have some protectionist measures that have been introduced pretty much everywhere so we have to look at this. These are the financial aspects and then if you look at the macro-economics, you have the imbalances. We have had the imbalances, particularly in China and the US but also some parts within Europe and elsewhere. So the question is what can be done to reduce them to some extent.”


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