Sheriff or cowboy? That was the question that we raised on the De Larosiere Group as their report on European financial regulation was launched yesterday. Eurodad staff joined colleagues from Corporate Europe Observatory and Friends of the Earth to dress up in checked shirts and hats and parade outside the European Commission’s Berlaymont building. Some of us carried “unwanted” placards, complaining that the so-called ‘wise men’ in the De Larosiere Group represent the same clique that had got Europe into the current financial mess. Friends of the Earth has the release and pictures.
A Euronews story picks up the campaigners’ angle. It quotes Paul de Clerck, one of the organisers of yesterday’s protest, saying “The financial industry has always had a very huge influence over the EC policies. The Commission basically took what the banks are telling them and this you can see is reflected in this advisory group.”
De Larosiere is an elder statesman of the European political scene - having headed the IMF, the Bank of France and European Bank for Reconstruction and Development. He is now Co-chair of the financial sector lobby organization, Eurofi, and until recently advised French bank BNP Paribas.
His fellow panellists are described in the protest press release as follows:
* “Rainer Masera: Former Managing Director of a European branch of Lehman Brothers, which went bankrupt after heavy losses on subprime loans;
* Onno Ruding: An adviser to CitiGroup, owners of Citibank that received billions of US dollars in a bail-out;
* Otmar Issing: Adviser to the financial giant Goldman Sachs;
* Callum McCarthy: Former head of the UK Financial Services Authority, accused of systematically failing in its duty over bust British bank, Northern Rock;
* Leszek Balcerowicz: A strident advocate of deregulation;
* José Pérez Fernández: Works for a financial market intelligence company, which counts several big banks as clients;
* Lars Nyberg: A career banker, now vice chair of the Swedish National Bank”.
The more detailed report Would you bank on them? Why we shouldn’t trust the EU’s financial “wise men” sets out the grounds for the “unwanted” charge in more detail. It discusses each of the individuals named above and concludes “the composition of the group is astonishing. It is hard to imagine a clearer example of privileged access to decision-makers by vested interests”.
What did this compromised group come up with? The main points were to strengthen cross-border financial supervision in the EU, but without adding a new pan-EU regulatory body. When? Over the next four years and stops short of introducing an all-powerful, pan-EU regulator. More details are in a handy Reuters FACTBOX.
Some of the points are certainly aiming in the right direction, for example on regulating the shadow banking system, including hedge funds. But will the "European Systemic Risk Council" actually be able to agree on and enforce measures to deal with risk? Unlikely. And there is much more to be done to introduce order into the messy European financial governance system. (See a January 2009 Eurodad et al report Financial Regulation in the European Union. Mapping EU Decision Making Structures on Financial Regulation and Supervision for more detail). Chris Giles in the FT is not over-impressed. He say’s De Larosiere’s “report is far from a European attempt to regulate hedge funds and tax tavens. Instead, it is a slavish follower of the latest regulatory fashions”. The one proposal that does get Giles’ praise is that the EU speak with a single voice and via a single representative in international arenas such as the IMF. As Giles acidly puts it” if anything should please those outside the EU, fed up with dealing with four or five large egos attached to medium-sized economies, this is it”. This is a point that Eurodad has been working on for some years - see our 2006 report A Question of Harmony: European Governance of the World Bank and IMF, our 2007 update How to Fit 27 Elephants in a Single Chair, and our update from last September. Oh, and you can also wait with baited breath for our forthcoming policy papers on the G20 summit, currently being finalised in consultation with our members and other allies across Europe.
Source: EURODAD- http://www.eurodad.org