September 30, 2008 / 11:03 AM / 11 years ago

UPDATE 2-EU says US must meet finance crisis responsibility

(Adds Mandelson, Beres)

By Paul Taylor

BRUSSELS, Sept 30 (Reuters) - The United States must live up to its special responsibility to resolve the global credit crisis, the European Commission said on Tuesday, calling for swift enactment of a bailout plan for the financial sector.

In an unusually sharp statement, the European Union executive said it was disappointed at the U.S. House of Representatives’ rejection of a $700 billion rescue package for distressed banks and financial institutions.

“The turmoil that we are facing has originated in the United States. It has become a global problem. The U.S. has a special responsibility in this situation ... We expect that the decision (on the bailout) will go through soon,” Commission spokesman Johannes Laitenberger told a news conference.

“The U.S. must take its responsibility in this situation, must show statesmanship for the sake of their own country and for the sake of the world,” he said in a prepared statement.

EU Trade Commissioner Peter Mandelson said in a Reuters Television interview that if Congress failed to act, “people will look at the state of the financial system in the United States and say that markets seem to be in a free-fall.

“Having made an attempt and then failed so far, people will assume that things can only get worse and that will produce a spiral, a downward spiral which could have some really bad consequences,” he said.

Laitenberger said rescue measures agreed by European governments for three troubled banks showed that public authorities in Europe were able to “live up to the task of providing financial stability”.

The European Central Bank and other banks were “doing a superb job” of providing liquidity to the markets in the current turmoil, he said, brushing aside calls for Europe-wide action to guarantee citizens’ savings or create a rescue fund for banks.

An EU summit on Oct. 15-16 would be an opportunity to define a joint European position on the financial crisis, he said.


The Socialist group in the European Parliament called on EU leaders to take action to clean up the global financial system and prevent further financial crises.

French socialist Pervenche Beres, who chairs the EU legislature’s economic and monetary affairs committee, said the EU needed a central financial regulator and a stronger role for the ECB in banking supervision.

“Only an integrated European supervisor, along the lines of the European System of Central Banks, which represents the interests of the euro zone, will be listened to,” she said.

The Commission, which is the 27-nation EU’s executive arm, rejected any suggestion that EU competition rules regulating mergers and setting strict conditions on state aid to industry should be suspended to cope with the widening credit crisis.

“(The competition rules) are part of the solution rather than the problem. They allow us to act very quickly,” Commission competition spokesman Jonathan Todd said. The rules provided a level playing field and gave companies confidence that others were not gaining an unfair advantage.

Todd said the Commission had received formal notification from Britain of its rescue of mortgage lender Bradford & Bingley BB.L and was expecting notification from Belgium on rescue measures for financial services groups Fortis FOR.BRFOR.AS and Dexia DEXI.PA(DEXI.BR).

The EU executive was also in close touch with the Irish authorities about their decision to guarantee all bank deposits and would examine any state aid component, he said.

The EU regulator pledged swift decisions on all cases.

“The issues that have arisen have been dealt with swiftly, responsibly and safely,” Laitenberger said.

“At this point in time, it would not appear that there is a situation that has not been addressed,” he said, deflecting calls for a common European approach to guaranteeing savings. “The system is coping and therefore we can also have confidence that it comes up with the right answers in a situation that is evolving.” (Additional reporting by Marcin Grajewski and Huw Jones, editing by Dale Hudson, Paul Bolding)

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