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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