STRASBOURG, France Oct 21 A draft motion to be adopted by the European Parliament puts the blame for the worst financial crisis in 80 years on the U.S. Federal Reserve, deficient supervision and poor quality credit ratings.
The European Union assembly has joint say with EU states in financial regulation, and lawmakers feel the crisis has given them a golden opportunity to overturn what many of them see as a light-touch regime for market institutions.
The origins of the crisis are in "years of too expansionist monetary policy by the U.S. Federal Reserve, lack of transparency in financial markets, excessive leverage of financial institutions, deficient supervision of financial markets and bad quality of ratings", the motion says.
Parliament is examining and adopting the executive's draft rules on bank capital requirements, insurers, mark-to-market accounting rule changes, and soon on registration of credit rating agencies and executive pay.
The motion has broad cross-party backing and signals the assembly will be taking a hard line on the measures. On Monday evening, lawmakers called for tougher safeguards on securitisation than the Commission has proposed.
The motion says the Commission should also present proposals on hedge funds, private equity, winding up rules for companies and clearing of over-the-counter markets.
The European Commission has sole right of initiative in EU rulemaking.
"The hedge funds and private equity now try to tell the story they have nothing to do with the financial crisis," former Danish prime minister Poul Nyrup Rasmussen of parliament's socialist bloc told a debate.
"Please promise me all actors have to be regulated, otherwise we are not learning from our experience," Rasmussen said.
Lawmakers have found a kindred spirit in French President Nicolas Sarkozy, whose country holds the rotating EU presidency.
"No financial institutions should be able to work without being covered by financial regulations," Sarkozy told parliament on Tuesday.
European Commission President Jose Manuel Barroso told parliament that no area of the financial market would be left out of the executive's review of EU financial rules.
Barroso is widely seen as now having taken charge of the financial regulation dossier from internal market commissioner, Charlie McCreevy, lawmakers said.
There was a need to be prudent, Barroso said. "We can't have empty announcements. We can't just make proclamations." (Reporting by Huw Jones, editing by Will Waterman)