Word: trichet
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...Reining in the Banks At the World Economic Forum in Davos last January, some participants advocated radical measures to rein in banks, including regulating their operations so heavily that they would turn into low-risk utilities. No, said Jean-Claude Trichet, the president of the European Central Bank, that wouldn't solve the problem. What's needed, he argued, "are air bags, cushions and shock absorbers." Trichet has now detailed what he means. On Sept. 6, a group of central-bank governors and regulators from 27 countries that is chaired by Trichet published specific proposals that he said would...
...abuses that led to the meltdown, such as the reckless issuance of subprime mortgages. In the U.S., the Treasury Department and lawmakers are seeking to bring greater transparency to the arcane world of financial derivatives by requiring the trading of them to be done through central clearing houses. Meanwhile, Trichet's group of central bankers wants banks to put up additional capital if they engage in especially risky types of financial market transactions. As the financial services industry braces for tougher oversight, it's keeping its fingers crossed. "There's a lot of wariness about all forms of financial market...
...board that sets ECB monetary policy seems to be divided over the best way to deal with the financial crisis. When asked about the discussion behind closed doors, Trichet would say only that the board reached a "consensus" on its decision. But consensus does not mean unanimous and there is plenty of reason to believe that some members think the ECB is going too far, too fast...
...recently as Nov. 25, Lorenzo Bini Smaghi, a member of the ECB executive board warned that cutting rates too sharply could contribute to destabilizing financial markets rather than help calm them. And Trichet seemed to echo that concern, refusing to give any clear guidance about what direction the ECB may take when it meets again in January. "For January, I say nothing. It's as simple as that," he said. "We have to be sure that what we are doing is really effective...
...begin to act more like the U.S. Federal Reserve and cut fast and deep? While it has flooded European markets with cash in recent months in an effort to revive the interbank lending market, it has not engaged in the purchase of assets from banks like the Fed. Trichet said the ECB has the power to do so, but is not showing his hand...