The government’s macro economic policy unit CPB did not warn the government too late about the looming credit crisis in 2008, the institute’s director Coen Teulings told a parliamentary committee on Monday.

The cabinet was told about the situation on October 27, Teulings told the committee. ‘We said then that the economy was in a very bad way. The situation was so serious I thought it appropriate to warn the cabinet,’ he said.
The committee has been set up to look at the development of the credit crisis and see what lessons can be learned. On Monday, it started three weeks of public hearings. ‘Anyone who is anyone’ in the financial world is scheduled to appear.
Committee chairman Jan de Wit pointed out that until late 2008, parliament had based its position on the CPB’s official forecasts, even though the economy had shrunk drastically.
Extreme situation
‘Late, no. We had to deal with an extreme situation,’ Teulings told the committee. However, he admitted that with hindsight the crisis began around the beginning of August, 2007.
Later in the day, former minister and banker Onno Ruding told the committee that bank sector regulators did not properly understand the complicated financial products banks were issuing and this made it difficult to do their jobs properly.
But he pointed out that products designed by US banks were much more complicated, that US banker bonuses were higher and that the regulation in the US was worse.
Bonuses back
And Rabobank’s Bert Bruggink urged the government to bring in measures to limit bankers’ bonuses, which are already mounting up again, he said.
‘Our staff can earn five times as much by a willing Japanese or Chinese [institution], ‘ he was quoted as saying by the Financieele Dagblad. ‘And that is happening. Good people are leaving.’
Rabobank has lost several dozen people because of the pay explosion, he said.