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EU divided over response to global financial turmoil

 EU divided over response to global financial turmoil
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The European Commission says it could take up to two years for new regulations on the financial industry to take effect.

The bloc has moved quickly to apply the lessons learned by the credit crunch, which is now having a knock-on effect in Europe.

EU Commissioner Charlie McCreevy said lack of regulation had not caused the problem – but future rules must be more intelligent: “From now on, originators of securitised assets will also have to make available sufficiently detailed raw data in respect of the cash flows and the supporting securitisation programmes to enable investing credit institutions to undertake appropriate sensitivity analysis and stress-testing of their own rather than relying on credit ratings.”

EU governments and the European Parliament will have the final say, but swift adoption of the reform is expected.

Meanwhile, Irish Premier Brian Cowan has been in Paris defending his government’s unprecedented decision to guarantee all savings in six national banks for two years.

The move ruffled feathers in Brussels – due to concerns over competition laws: “I think the president understands precisely the reasons why the Irish government had to act, the circumstances in which we found ourselves and that obviously he is calling a meeting this week to see in which way an EU response to the current crisis could be found,” Cowan told reporters outside the Elysée Palace.

The four EU members of the G8 are due to meet this Saturday to co-ordinate the bloc’s response to the crisis. This, despite opposition from Germany, whose ministers prefer action on a case-by-case banking basis.