Berlin, Germany, October 11, 2010 – On October 6, the international law firm Baker & McKenzie staged its 5th event in the scope of its initiative "Forum für Recht und Soziale Marktwirtschaft" (Forum for Law and Social Market Economy). With more than 300 political, business and media attendees gathered at the famous Hotel Adlon in Berlin, this has been the best attended Forum event so far. The law firm was prominently represented by the Chairman of its Executive Committee, Mr. John Conroy.
The main speaker of the evening was the former German Minister of Finance, Mr. Peer Steinbrück. His fellow panel members were Prof. Dr. Wolfgang Gerke, President of the Bavarian Finance Center, Mr. Sven Giegold from the German "green" party Bündnis 90/Die Grünen and Mr. Roland Tichy, editor-in-chief of the German weekly business news magazine
Wirtschaftswoche.
Peer Steinbrück stated his own opinion as to the issue at hand right at the beginning of his speech, holding that there was no question regarding the fact that we were currently experiencing a situation never before known and that this required further regulation of the financial markets. However, by no means were we anywhere near state capitalism. The crisis was not over yet, even though "we might have put the worst behind us" – however, this did not mean that we had effectively prevented future financial crises. There was still a much too large "shadow banking system" looming in the background. In particular, derivatives trading still lacked transparency. He argued that every transaction, irrespective of its nature, needed to be reflected in a balance sheet. Further there should be extended requirements pertaining to equity in the case of risky transactions. First steps had already been taken in this respect. Mr. Steinbrück commended the legal measures taken and passed by the US: tighter regulations actually served as the best instrument to "discipline banks managers when it comes to their ignorance of risks." He did, however, see the need for further "traffic rules" for the financial market.
Following Steinbrück’s deliberations, Panel moderator Prof. Dr. Joachim Scherer (Baker & McKenzie) invited Messrs. Gerke, Giegold and Tichy to join the podium discussion. Roland Tichy agreed with Steinbrück that the situation in Germany was nowhere near state capitalism.
In his opinion, some areas indeed required further regulatory measures, however, this did not translate into a return to state capitalism and, after all, we could not turn back the hands of time.
When asked whether the political landscape had possibly overreacted when faced with the crisis, Prof. Gerke answered that he did not think so, even if, in his opinion, the market served as the most efficient organizational instrument and therefore had to be preserved as an institution. However, as the market had revealed problems of its own, it had been indispensable to introduce binding rules and regulations. Sven Giegold then argued that when dealing with the crisis in a sustainable manner, the issue had to be tackled by taking a "clear inventory," something which had not yet been done. It was to be examined, in particular, "what markets could do in the first place." After all, the markets had underestimated potential risks for years and had proved not to be as effective as Gerke had pointed out before.
Peer Steinbrück concluded the discussion by quoting Karl Schiller’s statement: "As much market as possible combined with as much government as necessary." The concept of market and government or regulation and deregulation should not be seen as contradicting issues. Instead, a sense of pragmatism should prevail, thus allowing government intervention if necessary. All panelists agreed that the most important aspect consisted in the fact that regulatory measures were employed "in an intelligent manner."
More information regarding the event can be found on
www.bakerforum.de.