The Steinbrück Show German Finance Minister Accuses Brits of Kowtowing to Bankers

Peer Steinbrück is back on the verbal warpath. This week's target is a returning guest -- Britain. The alleged offense at 10 Downing Street: torpedoing efforts at EU financial reform to keep London bankers happy.


German Finance Minister Peer Steinbrück is known for speaking his mind and not pulling his punches. And things were no different on Wednesday when Steinbrück told an audience that Britain was blocking efforts to reform the world's financial markets -- just to keep London bankers happy.

German Finance Minister Peer Steinbrück speaks at a congress on financial regulation: "(London) has restoration in mind."
REUTERS

German Finance Minister Peer Steinbrück speaks at a congress on financial regulation: "(London) has restoration in mind."

In his speech to a Wednesday meeting organized by the Confederation of German Trade Unions (DGB), Steinbrück accused the British government of having its policy interests "practically aligned" with the desires of the financial community there, which was opposed to any changes that might make it less competitive. "At times," Steinbrück said, "I see a great deal of resistance to regulatory measures whenever they matter to the City of London and the British government."

Steinbrück believed that the British were hindering reform because they wanted things to return to how they were before the crisis. "I think London in particular is very suspect," Steinbrück said. "They have in mind a certain sort of restoration, most likely a return to former conditions."

Although he scolded the British, Steinbrück had much praise for the Obama administration's efforts to push through financial market reforms. He attributed the US's enthusiasm to its high dependence on capital imports, which makes it keen to reestablish the integrity of its financial markets.

'No Tabula Rasa'

Steinbrück went on to say that the British were swimming against the global tide of pro-reform sentiments. As an example, he cited the EU summit in Brussels a few weeks ago held to discuss the establishment of a European financial supervisory board. Steinbrück accused the British of intervening to block the passage of measures both Germany and France considered necessary.

Steinbrück stressed that, in his opinion, the reaction to the financial crisis isn't about "creating a "tabula rasa" but, rather, about having the state set up "guard railings" to prevent "a repetition of the crisis."

This is not the first time Steinbrück has had harsh words for London. In December, Steinbrück ruffled diplomatic feathers with his harsh criticism of Britain's economic stimulus plans during an interview with Newsweek magazine, saying that "the same people who would never touch deficit spending are now tossing around billions."

Still, Steinbrück's comments about the British are not quite as harsh as what he has said about the Swiss. Last fall, he unleashed a diplomatic storm when he threatened to "take a whip" to Switzerland unless it relaxed its banking secrecy laws. And then there was the incident in May when Steinbrück said that Switzerland, Austria and Luxembourg could be on a par with Burkina Faso when it came to the OECD's gray lists of tax havens.

Steinbrück's comments come just a few days before world leaders and diplomats meet for the G-8 summit in Italy, where discussions on financial market reforms will continue.

At Wednesday's meeting, Steinbrück also had a few things to say about plans by Chancellor Angela Merkel's Christian Democrats (CDU) to centralize German banking regulatory functions with the country's central bank, the Bundesbank. Germany's central bank currently shares oversight responsibilities with the Federal Financial Supervisory Authority (BaFin). "In terms of quality," Steinbrück said, "Germany's banking oversight is just as good as all the others in Europe and definitely better than America's."

-- jtw, with wire reports

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