Magazine article American Banker

House Panelists: EU Plan Could Harm U.S. Banks

Magazine article American Banker

House Panelists: EU Plan Could Harm U.S. Banks

Article excerpt

Key lawmakers are complaining that a plan to restructure the oversight of European financial markets could hurt American banking companies that do business there.

The European Union's "Financial Services Action Plan," scheduled to be completed by 2010, consists of 42 measures aimed at consolidating the economies of its 15 nations and future members.

Members of the House Financial Services Committee, including its chairman, Rep. Michael G. Oxley, raised concerns at a hearing last week that the plan could impose stricter accounting standards, tougher supervisory requirements, and higher capital charges than those enforced in the United States.

For example, American firms use generally accepted accounting principles that do not require them to list stock options as an expense, but the EU plan could force those that do business in Europe to adopt international rules that deduct the value of options against earnings.

"I don't understand why the EU would choose this forum, which after all is supposed to be dedicated to harmonizing accounting standards, to raise this contentious issue," said Rep. Oxley, R-Ohio.

Rep. Carolyn B. Maloney, D-N.Y., said it was "troubling that Europe is going to come over here and preach to us about our accounting standards."

The plan would also set special supervisory standards for conglomerates. According to Scott Duncan, an assistant communications director for the Financial Service Committee, unless U.S. holding companies are deemed to be under supervision that is "equivalent" to European holding companies, they could face higher capital and risk control requirements. …

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