Steinmeier says Europe warned US on financial crisis

Steinmeier says Europe warned US on financial crisis
Steinmeier visiting Wall Street. Photo: DPA
German Foreign Minister Frank-Walter Steinmeier said during a visit to Wall Street on Wednesday that European states had long tried to convince the United States to approve measures that would have averted the current financial market crisis.

Steinmeier offered his version of “I told you so” during a visit to the US Stock Exchange and said that Germany, Europe’s biggest economy, had run into an American brick wall when it called for more checks on international finance.

“I must say that we, and the finance minister (Peer Steinbrück) in particular, were right in the recommendations that we have been making for two years,” he told reporters on Wall Street.

“First of all, to ensure more transparency on international finance markets and secondly, to demonstrate more sensitivity to risk.”

Steinmeier said he was pleased to hear in his talks with US bankers and traders this week on the sidelines of the UN General Assembly’s annual debate that there was now “strong support” for market regulation to avert crises like the current one.

“It is a discussion that we have had for a long time in Europe, that the completely unregulated parts of the international financial market must be more closely monitored and that we must try to reach an agreement on common regulations,” he said. “There is agreement here on that now.”

He cited greater monitoring of new products available on finance markets and the need to ensure banks have sufficient capital as areas where there was now growing international consensus.

“All of this is going to stay on the agenda for a long time,” Steinmeier said, noting the ripple effect was being felt in leading emerging markets such as China and Russia. Steinmeier said the crisis was dominating the UN General Assembly debate and said African leaders in particular were concerned that the tightening of credit in the West would force cuts in development aid.

He said it was too soon to tell whether their fears were justified but noted that aid was “not significantly based on the financial markets” although their role in such budget earmarks had grown in recent years. Germany headed the Group of Eight industrialized nations last year and

advocated greater transparency in international financial transactions, especially in hedge funds. But it was thwarted by US and British resistance.

US lawmakers have proposed a $700-billion rescue package to avert calamity in the financial market after the bankruptcy of investment firm Lehman Brothers and an 85-billion-dollar aid package for insurance and financial giant AIG last week.