EIR questions Margrethe Vestager, Danish Economics Minister, about Glass-Steagall bank separation

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EIR Challenges Danish Economics Minister, Who Chairs EU EcoFin
Group, on Glass-Steagall as the Only Option for Europe

COPENHAGEN, Jan. 27, 2012 (EIRNS)--Danish Minister for Economics
and the Interior Margrethe Vestager, who, under the current Danish European Union presidency, also chairs the EcoFin group of
economics and finance ministers, held a press conference at the International Press Center today, where EIR challenged the minister about the Glass-Steagall solution.
        Though Vestager started by calling for regulating the financial markets, and learning the lessons from the crisis of 2008, in the face of the enormity of the collapse, the proposals
which EcoFin discussed at their Jan. 24 meeting, and the economic policy priorities of the Danish presidency amount to different
options for rearranging the deck chairs on the Titanic. This includes: their Jan. 24 agreement to establish clearing house transparency, not elimination, of derivatives; paving the way for
the juridical passage of the Europact; more substantial capital requirements for banks; credit agency reform; the Tobin tax discussion; and "consolidation" -- a euphemism for austerity.
        In contrast, EIR correspondent Michelle Rasmussen asked:
"It's become more and more clear -- when you speak about the need to regulate the financial sector, and learn from the problems before, that the policy of austerity and bank bailouts is not working, and there have been increasing calls for a Glass-Steagall bank-division policy, where the governments would not have to guarantee the speculative debt -- but that would be isolated in investment banking -- including the former Finance Minister of Italy Tremonti, and now the leading Socialist [Presidential] candidate in France, Hollande, talking about bank separation.
        "So will you be discussing something that could actually solve the crisis, as a kind of bank separation policy? And then, the second question is, what is it that have you decided about the derivatives?
        Economics Minister Margrethe Vestager replied: "I may be misinformed, but I don't think that we have a proposal on the table concerning bank separations. I think in some countries, they are considering it on their own means, but we don't have that on the table, and as I know European decision-making
mechanisms, I don't think that we could produce a proposal, or the [European] Commission could produce a proposal and pass it within our [six-month] presidency. I think it's one of the discussions that will keep evolving over the coming months. I don't think that will be, sort of, the silver bullet into the crisis solution. Basically I think that a number of things have to be done in order to solve both the sovereign debt crisis, but also to make sure that we have the proper regulation, after the
financial crisis of 2008.
        "On the question of derivatives, one of the problems was that a lot of the derivatives were traded over the counter, and the idea of the directive [European markets infrastructure regulation (EMIR)] is to make sure that you have a kind of clearing houses ... to make sure that everyone knows who is the buyer and who is the seller, and they can actually buy the product that they say they're going to buy....
        "The last thing that we were discussing was these clearing houses, called CPPs, in EU lingo, how should they be regulated? How can we make sure that they have the right muscle to do what they are supposed to do? Who should pay attention to what they are doing? And we've been discussing that -- the role of ESMA, the European authority on that...."
        Vestager, the leader of the Social-Liberal Party, is under increasing political attack in Denmark for blocking the acceptance of a Tobin tax, being pushed by Merkel and Sarkozy, unless it were global. While the Schiller Institute supported such a transaction tax many years ago as a way of reducing speculative investment, now, it it totally insufficient to deal with the full collapse in progress. Only Glass-Steagall bank separation, outlawing all derivatives, and creating massive amounts of national bank credit for productive investment, can allow us to jump from the sinking ship over to a seaworthy one.
        The entire press conference is here, and EIR's question starts at 25:06 minutes: www.schillerinstitut.dk/margrethew270112.mp3

- mr