A 260-page declaration of class war was issued in Cannes earlier this month.
The final report of the B20 summit, a gathering of business chiefs coinciding with the Group of 20 meeting for political leaders, contains this explicit demand: “Restore fiscal stability by reducing public spending rather than by increasing corporate taxation.” If a software package is ever developed to translate executive speak into plain English, it might just transform that sentence into: “Indulge the wealthy; make life miserable for everyone else.”
It would be comforting if this paper was destined to gather dust. Tragically, that core demand is already being put into effect in many countries, without the governments and institutions overseeing its implementation having any democratic mandate to do so. We saw how George Papandreou was browbeaten into retreating when he dared to suggest that the Greek people should be allowed to vote in a referendum on austerity. Less widely-reported, the Irish finance minister Michael Noonan has lately described as “sacrosanct” the deficit reduction targets set for his country by the European Union and International Monetary Fund. When standing for election in February this year, the same Noonan pledged to renegotiate the diktats he now regards as “sacrosanct”.
Can the European Parliament strike a blow for the disadvantaged? In theory, the EU’s only directly-elected institution can. In practice, it seldom does.
This week, the Parliament’s economics and monetary affairs committee will probably approve its official position paper on the innocuous-sounding but highly dangerous “European semester” arrangement.
Even though that arrangement usurps democracy by requiring the national governments of EU states to have their annual budgets vetted by the unelected European Commission, most MEPs sitting on that committee appear untroubled. The draft version of the paper they are considering merely recommends a few tweaks to the Commission’s proposals such as keeping MEPs abreast of what other EU bodies get up to.
It is telling that Pervenche Berès has drawn up the Parliament’s paper. As chairwoman of the economic and monetary affairs committee, she made it to number eight on the “Top 50 Power List” compiled by the Accountancy Age in 2008. According to the magazine, she has been prepared to “ruffle the feathers” of the International Accounting Standards Board by querying moves by that (ironically unaccountable) private sector body to converge US business reporting standards with those used in the rest of the world.
Affront to democracy
Rather than making a habit of ruffling feathers among the titans of finance, Berès is generally accommodating towards them. She has combined holding one of the more coveted positions within the Parliament’s structures with membership of the European Parliamentary Financial Services Forum (EPFSF).
That forum is another affront to democracy. In return for an annual fee of 8,000 euros, banks and other providers of financial services enjoy privileged access to the MEPs who are supposed to be regulating their sector. Companies who are not fully signed up to the forum can still take part in the “briefing sessions” it organises, provided they pay 200 euros each time. If political parties were holding fund-raisers, where businesspeople coughed up comparable sums to have chinwags with ministers, the press would rightly be curious.
While Berés told Spinwatch, a group monitoring relations between business and politics, in 2008 that she was not an active member of the EPFSF, the forum’s own website indicates that she chaired at least five of its meetings between 2003 and 2008. In 2005, she was in the hot seat for a discussion on mortgages, where the two “guest speakers” came from BVBA and BNP Paribas. There is no suggestion that Berès benefitted personally from the discussion. But the fact she was also chairwoman of the economic and monetary affairs committee surely meant there was a conflict of interests involved. She cannot seriously claim that a corporate-funded body is a neutral or objective forum for debate.
Among the corporate participants in the forum are Barclays, DeutscheBank, Goldman Sachs, the International Swaps and Derivatives Association (ISDA) and the crediting ratings agency Standard and Poor’s.
Hedge funds write the script
The ISDA has been lobbying to ensure that EU rules on hedge funds end up being to its liking. Its work has inevitably brought it in close contact with another French MEP, Jean-Paul Gauzés, who has been tasked with preparing the Parliament’s official positions on hedge funds and credit ratings agencies. Guess what? Gauzés is also a member of the financial services forum.
The influence of hedge fund lobbying on the Parliament was apparent from the outset. During the first debate on proposed new rules that the economic and monetary affairs committee held in 2009, German MEP Wolf Klinz argued that the recommendation on the table failed to distinguish between different types of investment funds. “The problem is the one-size-fits-all approach,” he said.
I checked a briefing paper that the EPFSF circulated on the same proposals in 2009. It closely resembled Klinz’s comments by warning of a “one-size-fits-all approach of regulation to a very heterogeneous group of fund types”. The resemblance is unlikely to be accidental. Klinz is the current chairman of the forum.
Also this week, Michel Barnier, the EU’s single market commissioner, is scheduled to come forward with new proposals on credit ratings agencies. Don’t be surprised if the MEP put in charge of responding to them sits on the aforementioned forum.
Theodore Roosevelt once spoke of an “unholy alliance” between business and politics. That kind of alliance is commonplace in Brussels.
●First published by New Europe, 14 November 2011.
Showing posts with label European Parliamentary Financial Services Forum. Show all posts
Showing posts with label European Parliamentary Financial Services Forum. Show all posts
Friday, November 18, 2011
Monday, July 5, 2010
Bankers besiege European Parliament
Besieged by bankers opposed to the regulation of their sector, members of the European Parliament (MEPs) have taken an unusual step. A cross-party alliance has called for an international campaigning organisation to concentrate on remedying the flaws of the financial services industry with the same tenacity that Amnesty International focuses on victims of torture and Greenpeace on toxic chemicals and whales.
The call – signed by 70 of the Parliament’s 736 elected members – was prompted by concerns over how the financial lobby had marshalled its ample resources over the past few years in a bid to dilute legislation drafted in response to the global economic crisis. According to the MEPs, the pressure they have been placed under by the financial industry is so intense that it represents a threat to democracy, especially as public interest groups have generally lacked the means or the expertise to mount a robust counter-offensive to the banks’ efforts.
The pressure from the financial industry is unlikely to be eased in the coming months as the European Union’s only directly elected body considers a number of crucial dossiers.
First, the Parliament will vote July 7 on proposed new rules on capital requirements for banks and on how much financial whiz-kids may be paid in bonuses. Written in response to the immense public anger over how banks rescued at the taxpayers’ expense were maintaining lavish pay-and-perk deals for their management, the latest draft of the proposal would require that upfront cash bonuses do not exceed 30 percent of total bonuses. Instead of doling out bonuses in cash, between 40 percent and 60 percent of all bonuses would have to be deferred and could be recovered in cases where investments fare badly.
Arlene McCarthy, a British Labour Party MEP who has been leading the Parliament’s negotiations with EU governments on the proposal, is among those who have expressed misgivings about the influence that banks wield over politicians and civil servants. She has stated that her plan is not designed to punish bankers but rather to ensure that bonuses they receive are linked to their performance.
The European Banking Federation (EBF), an umbrella group for 5,000 banks, is claiming that this kind of ceiling on bonuses would prove economically damaging.
“The European Parliament is promoting rules that are more stringent than those of our major trading partners and competitors,” Robert Priester, an EBF representative, said. “The stricter rules in the EU raise issues of competitiveness for Europe’s banking or financial services sector.”
According to data it made available to an EU register of lobbyists, EBF spent over 1 million euros (1.3 million dollars) last year in trying to influence the Union’s institutions. “Lobbying in the EU is fundamentally different from the U.S. where donations and contributions are commonplace to exert influence,” said Priester. “The European institutions do not work that way and EBF does not need to make such donations.”
Despite claiming to have a relatively small budget for its activities, the EBF has been able to ensure it has full access to the Brussels elite. Its secretary-general Guido Ravoet doubles up as chairman of the European Parliamentary Financial Services Forum. Presenting itself as dedicated to spreading “neutral information”, the forum is nonetheless brings together some of the best-known players in the global banking industry such as Goldman Sachs, Deutsche Bank and JP Morgan - and MEPs sympathetic to them. Some MEPs – including McCarthy – who have warned about the power of the financial lobby are also active in the forum.
In February, the forum published a briefing paper, exhorting MEPs to radically reshape a proposed EU directive regulating hedge funds. Originally this directive had been slated for a vote in the Parliament in July but the decision has been postponed for another few months, while the main EU institutions continue to deliberate over its contents.
The hedge fund industry – financial speculators largely based in the City of London – has literally been seeking to write the rules it should play by itself. In April, the Parliament’s main committee for economic affairs voted on its response to the proposed law. MEPs had to wade through 1,600 suggested amendments to the law on that occasion. Although only MEPs themselves can sign amendments, it is common practice for industry lobbyists to act as “ghost-writers”. More than half of the amendments in this case were written by the financial services industry, according to Parliament insiders.
Whereas hedge funds have been widely accused of engaging in highly risky practises that helped trigger the global financial crisis, their supporters have been portraying them as economically beneficial. Open Europe, a corporate-funded “think-tank” in London, has published several pamphlets arguing that hedge funds and private equity bring billions of pounds in tax revenue to the British economy each year, while not addressing evidence compiled by the Tax Justice Network and anti-poverty advocates of how hedge funds can be vehicles for tax evasion.
A hedge fund lobbyist, who spoke on condition of anonymity, said it is “absurd” to argue that financial services endanger democracy. “Before now, we were criticised for not engaging – in inverted commas – with policy-makers,” he said. “Now that we have engaged, the perception is we have engaged too much. The truth of the matter is that many MEPs are so ignorant of how financial services work that there is an absolute need to have the relevant industries offering their views. Otherwise, the consequence would be dreadful legislation.”
Olivier Hoedeman from Corporate Europe Observatory, a lobbying watchdog, says that the financial services representatives have “no reason to complain whatsoever” about belated efforts to regulate their sector.
“The banking lobby in Europe has been very successful so far in postponing and avoiding any serious new regulation,” he said. “The EU is far behind the U.S. We have a very ironic situation, where there have been more positive changes and tougher regulations passed so far in the U.S. The EU has left things up in the air.”
•First published by Inter Press Service (www.ipsnews.net), 5 July 2010
The call – signed by 70 of the Parliament’s 736 elected members – was prompted by concerns over how the financial lobby had marshalled its ample resources over the past few years in a bid to dilute legislation drafted in response to the global economic crisis. According to the MEPs, the pressure they have been placed under by the financial industry is so intense that it represents a threat to democracy, especially as public interest groups have generally lacked the means or the expertise to mount a robust counter-offensive to the banks’ efforts.
The pressure from the financial industry is unlikely to be eased in the coming months as the European Union’s only directly elected body considers a number of crucial dossiers.
First, the Parliament will vote July 7 on proposed new rules on capital requirements for banks and on how much financial whiz-kids may be paid in bonuses. Written in response to the immense public anger over how banks rescued at the taxpayers’ expense were maintaining lavish pay-and-perk deals for their management, the latest draft of the proposal would require that upfront cash bonuses do not exceed 30 percent of total bonuses. Instead of doling out bonuses in cash, between 40 percent and 60 percent of all bonuses would have to be deferred and could be recovered in cases where investments fare badly.
Arlene McCarthy, a British Labour Party MEP who has been leading the Parliament’s negotiations with EU governments on the proposal, is among those who have expressed misgivings about the influence that banks wield over politicians and civil servants. She has stated that her plan is not designed to punish bankers but rather to ensure that bonuses they receive are linked to their performance.
The European Banking Federation (EBF), an umbrella group for 5,000 banks, is claiming that this kind of ceiling on bonuses would prove economically damaging.
“The European Parliament is promoting rules that are more stringent than those of our major trading partners and competitors,” Robert Priester, an EBF representative, said. “The stricter rules in the EU raise issues of competitiveness for Europe’s banking or financial services sector.”
According to data it made available to an EU register of lobbyists, EBF spent over 1 million euros (1.3 million dollars) last year in trying to influence the Union’s institutions. “Lobbying in the EU is fundamentally different from the U.S. where donations and contributions are commonplace to exert influence,” said Priester. “The European institutions do not work that way and EBF does not need to make such donations.”
Despite claiming to have a relatively small budget for its activities, the EBF has been able to ensure it has full access to the Brussels elite. Its secretary-general Guido Ravoet doubles up as chairman of the European Parliamentary Financial Services Forum. Presenting itself as dedicated to spreading “neutral information”, the forum is nonetheless brings together some of the best-known players in the global banking industry such as Goldman Sachs, Deutsche Bank and JP Morgan - and MEPs sympathetic to them. Some MEPs – including McCarthy – who have warned about the power of the financial lobby are also active in the forum.
In February, the forum published a briefing paper, exhorting MEPs to radically reshape a proposed EU directive regulating hedge funds. Originally this directive had been slated for a vote in the Parliament in July but the decision has been postponed for another few months, while the main EU institutions continue to deliberate over its contents.
The hedge fund industry – financial speculators largely based in the City of London – has literally been seeking to write the rules it should play by itself. In April, the Parliament’s main committee for economic affairs voted on its response to the proposed law. MEPs had to wade through 1,600 suggested amendments to the law on that occasion. Although only MEPs themselves can sign amendments, it is common practice for industry lobbyists to act as “ghost-writers”. More than half of the amendments in this case were written by the financial services industry, according to Parliament insiders.
Whereas hedge funds have been widely accused of engaging in highly risky practises that helped trigger the global financial crisis, their supporters have been portraying them as economically beneficial. Open Europe, a corporate-funded “think-tank” in London, has published several pamphlets arguing that hedge funds and private equity bring billions of pounds in tax revenue to the British economy each year, while not addressing evidence compiled by the Tax Justice Network and anti-poverty advocates of how hedge funds can be vehicles for tax evasion.
A hedge fund lobbyist, who spoke on condition of anonymity, said it is “absurd” to argue that financial services endanger democracy. “Before now, we were criticised for not engaging – in inverted commas – with policy-makers,” he said. “Now that we have engaged, the perception is we have engaged too much. The truth of the matter is that many MEPs are so ignorant of how financial services work that there is an absolute need to have the relevant industries offering their views. Otherwise, the consequence would be dreadful legislation.”
Olivier Hoedeman from Corporate Europe Observatory, a lobbying watchdog, says that the financial services representatives have “no reason to complain whatsoever” about belated efforts to regulate their sector.
“The banking lobby in Europe has been very successful so far in postponing and avoiding any serious new regulation,” he said. “The EU is far behind the U.S. We have a very ironic situation, where there have been more positive changes and tougher regulations passed so far in the U.S. The EU has left things up in the air.”
•First published by Inter Press Service (www.ipsnews.net), 5 July 2010
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