Fine Company, Even Finer ConversationBy Francine • May 1st, 2008 • Category: Northern Rock, Parmalat, Ratings Agencies, Subprime
My Twitter communiques (follow me!) reported my pleasure at the invitation to a private dinner Monday night with a delegation from the European Parliament. I accepted it immediately, when it arrived, not knowing how or why it had. But a luxe dinner with smart people, especially foreign visitors, is always my cup of tea.
The meal was sponsored by the Chicago Council on Global Affairs and the Konrad Adenauer Foundation for a delegation of German and Austrian European Parliament members. They’re on a whirlwind tour to Boston, New York, Chicago and DC to get an update on US business and political issues of interest. Here in Chicago they had several meetings earlier that day with business and academic leaders and with Barack Obama’s Chicago-based campaign manager.
According to several in the delegation, Obama is the hands-down choice for President of the US by Germans. If he were running in Germany, they said, he would win by a landslide. It was refreshing to be in a serious business setting and not have to make excuses for my more progressive views, for a change. I may not have been the most progressive in the room!
The delegation was very impressed at the organization of the Obama campaign and its success thus far but most distressed, as most anyone outside the US usually is, by the amount of money being spent on the campaigns. They find it obscene.
The first people to greet me as I arrived at the private dining room in the Park Grill restaurant at Millennium Park here in Chicago were Dr. Norbert Wagner and his beautiful wife Gabriela, the hosts of the dinner. Dr. Wagner is a distinguished looking diplomat-type and the Executive Director of the Konrad Adenauer Foundation in Washington DC.
It was explained to me later that each of the major political parties in Germany has such a foundation/think tank for advocacy and lobbying and conducts this kind of education and outreach on behalf of Germany’s and that party’s interests all over the world. The Konrad Adenauer Foundation is aligned with the Christian Democrats in Germany and, therefore, many of the parliamentarians present were of that persuasion.
Dr Wagner’s first question to me, after looking at my name tag, was, “Are you Andy McKenna’s wife?” It seems that the delegation had the pleasure of meeting earlier in the day withthe accomplished businessman and now Republican Party of Illinois Chairman, Andrew J. McKenna, Jr.
My answer to this question, and I get it all the time, usually is, “Why do you ask?” But I didn’t want to be coy with this crowd and, so, I said no. I’m not Mrs. McKenna. That’s my mother. Andy and I are from completely different sides of the world, literally and figuratively…
We had a lovely dinner, with plenty of German wine and then a few speeches. Afterward, an open dialogue was encouraged. The discussion was started by a gentleman named J. D. Bindenagel. He was quite emphatic in his points on Iraq, Afghanistan and was beating the “Iran is very dangerous” drum.
After some spirited discussion, the German Consul for Chicago Wolfgang Drautz, who was seated at my left, whispered in my ear, “Francine, please ask a question on regulation of capital markets and the accounting firms.”
I don’t often get such a plea, but for some reason he was anxious to change the subject.
What is the view of the European Parliament of the role of national regulators in the subprime crisis and the role of the Big 4 firms in ensuring scandals such as Parmalat, Northern Rock, Siemens, and Royal Ahold do not repeat?
The respondent to my question, deemed the expert in these areas, was Dr. Werner Langen, a member of the European Parliament and Chairman of the CDU/CSU Group in that body. He spoke in German and Dr. Wagner translated. His remarks, abbreviated and loosely translated, were:
The Parliament is very disappointed in local regulation of the financial markets in light of recent scandals. Recent capital markets upheavals and economic issues such as the subprime crisis are now threatening the economic health of the EU as well as of the US.
We are especially concerned at the failure of the rating agencies , Moody’s, Standard and Poor’s, and Fitch , to provide objective and competent ratings. We are looking at the lack of competition and lack of proper incentives in this industry for opportunities to improve reliability of information to investors.
In addition, outrageous salaries and compensation have distorted motives and values and made it difficult for senior managers, such as Deutsche Bank’s Ackerman, to sufficiently supervise bankers and traders that are being paid amounts more than 10 times more than he is.
The EU Parliament is considering whether tighter and more consistent regulation at the EU level can bring more accountability and transparency and prevent future economic scandals and dislocations.