21 June 2001, 13:11  Transcript:Greenspan on EU-US Views of GE-Honeywell

WASHINGTON (MktNews) - The following is a transcript of the remarks of Federal Reserve Chairman Alan Greenspan Wednesday morning, answering questions from the ranking Republican on the Senate Banking Committee, Sen. Phil Gramm, about the implications of the EU's negative stance on the General Electric-Honeywell merger:

SEN. GRAMM: I guess maybe I'm overreacting a little bit to the GE-Honeywell problem and the decision by the European anti-trust division to question it even though -- and I understand being domiciled for a big international company is not as relevant as it once was -- but I guess by traditional definitions, these are both American companies. And maybe I'm overreacting to that but I look at, as I'm sure you're aware Mr. Chairman, in April, the European Union proposed a financial conglomerate directive, basically having to do with a question about financial conglomerates operating in Europe and they raised at least in a formal sense in my opinion, maybe for the first time, the question about whether to accept the regulatory supervision and decision of the home country regulators or whether to actually go behind that in exercising regulatory authority over the conglomerate if much of it is in another country outside Europe. Now I understand these are problems we're going to have to come to grips with because the plain truth is there's no such thing as an American company any more. These are world companies. But I'd like to get your thoughts about this, in particular anything you'd want to say about this proposal that was out in April and any concerns you have about it.

GREENSPAN: Senator, I think we are dealing in this area with some of the very deep cultural values of differing countries. The issue of bankruptcy, for example, seems to be a technical one, and we have very great difficulty unifying international bankruptcy codes, largely because of the view of debtor-creditor relationships is a deep-seated view of fundamental relationships in a society. And I can tell you that the differences we have run into in that particular regard are really quite surprising. The same thing exists, as far as I can judge, in the anti-trust area. In the United States, for example, our fundamental premise is the health, I should say, advance of consumer interests and that all focuses on enhancing competition, which is fundamentally the underlying rule of all American anti-trust statutes. We don't, for example, particularly try to protect the competitors of individual firms who are involved in anti-trust suits. Our focus is solely on the consumer. That's not true in Europe. I mean it's not true in a lot of places, that there is a very fundamental view about the nature of competition in some case classified as cutthroat and therefore undermining the stability of the society and its values. Unless and until we find a way to create a capacity to have -- for exactly the reasons you suggest, namely that we are getting increasing degrees of globalization and it is very difficult to differentiate the nationality increasingly of individual conglomerates -- I think somewhere down the line we are going to have to come to grips with this in a very much more general way. We have not. But I do think the issue you are raising and one which must be resolved if we are going to continue to get the benefits of globalization which in my judgment are many.

SEN. GRAMM: I'd just like to say, and I won't ask my second question because I've run out of time, but I'm especially concerned about the Europeans because they've adopted a privacy policy that's unworkable and as a result would love to impose it on everybody else. I think you can question the logic of their environmental policy, their regulatory policy and my concern is that we don't end up having bad policies imposed on us as Europeans try to protect themselves against competition when they've lost competitive edge based on their policies that they've implemented through either their supernational government or at the national level. And I think this is something we're going to have to look at very, very closely.

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