As the European Parliament inaugurated its brand new special committee on the financial crisis, Wolf Klinz, the panel’s chair, warned fellow lawmakers that “we must be prepared to have our own views on the degree of European regulation challenged”. He spoke to EURACTIV in an interview.
Keeping an open mind on how best to regulate financial markets was one of the battle cries at the inaugural meeting of a special committee on the financial crisis in the European Parliament yesterday (15 October).
“I do not want Europe to be turned into a fortress and a prison,” Klinz told EURACTIV in an interview minutes before the committee’s inaugural meeting yesterday.
Klinz, who won a seat in the European Parliament with Germany’s Free Democratic Party (FPD), was nominated as the chair today without opposition from the committee’s 45 members.
However, true to his own political background, he adopted a pro-business approach to regulation, which will undoubtedly stir opposition from the Socialist factions of the committee, who have been the most fervent critics of a lack of financial prudence and regulation.
Currently, the Socialists are the second biggest group on the committee with 12 members, pipped only by the centre-right European People’s Party (EPP) with 17.
The committee will have no legislative teeth but will make recommendations to the European institutions at the end of a 12-month mandate. Members have also cast much doubt over the Parliament’s ability to single out experts to inform the legislative process, some only having a scant press article as proof of their expertise, as one member noted during the inauguration meeting yesterday.
Klinz said the committee will attempt to draw on a spectrum of views and would not allow itself to be influenced only by “so-called financial experts or representatives of financial institutions”.
Hedge funds and bankers’ bonuses
Possible points of contention between Klinz and his cohorts on the committee will be a proposal to regulate alternative investment funds and attempts to have a pan-European rule on bonus payments in financial institutions.
The proposal to regulate private equity funds and hedge funds has probably caused the greatest fault lines in the Parliament. The idea of leverage caps used by such funds is likely to be the subject of tense negotiations. London Mayor Boris Johnson made a flying visit to Brussels in September to persuade the Commission and the Parliament to reconsider the proposal (EURACTIV 03/09/09).
Bonuses are a matter for member states, says Klinz. “We already have governance bodies, shareholder meetings, and supervisory boards that should consider themselves responsible for implementing proper remuneration policies in their companies.”
To some surprise, Klinz said he was disappointed at the Commission’s concept of financial supervision. The current proposals for a European Systemic Risk Board and a European System of Financial Supervisors are watered-down versions of a pan-European supervisor that would have allowed member states to speak with one voice, a necessity in a single market, said Klinz.