Lawmakers scold City lobbying on EU finance rules

To forge proposals on financial regulation, the European Commission continues to rely on the advice of financial expert who have vested corporate interests, especially from the City of London, EU lawmakers are claiming.

MEPs have endorsed a report by the think tank Alter-EU, which has analysed the make-up of the European Commission’s financial expert groups, people invited to advise the Commission on financial matters. The report concludes that large private banks and insurance giants have dominated the Commission’s thinking before and after the onset of the financial crisis. 

The finance industry is investing its time and money in helping devise financial regulation, Poul Nyrup Rasmussen, the leader of the Party of European Socialists and former Danish prime minister, said at a conference backing the transparency lobbyist’s report. 

Two members of the parliament’s newly-established special committee on the financial crisis (EURACTIV 16/10/09), Cornelis de Jong and Sven Giegold, came out in force against the EU executive’s proposals on regulating the financial sector. Both MEPs backed the findings of the report and criticised the Commission’s interpretation and its response to the crisis. 

Commission “narrow-minded” 

The EU executive department responsible for financial regulation is the DG Internal Market, which since October 2004 has been led by the former Irish Minister for Finance Charlie McCreevy. According to the report, there are 8 external expert groups, 84 % of which are made up actors from the financial industry. 

Just 8% of the members come from trade unions, 4% from consumer NGOs and 4% from academia, says the report with the most representatives coming from Deutsche Bank, BNP Paribas and Société Générale. 

Current Commission proposals skirt around the fact that we don’t know what to do if another crisis happens, de Jong said, criticising the Commission for remedial solutions to bankers’ bonuses and financial supervision. 

Giegold lambasted a recent report from the EU executive on its response to the crisis as “narrow-minded” for failing to take into account global imbalances between the three leading currencies: the yen, the dollar and the euro. 

London is a key lobby 

Rasmussen alleged that currently there is a substantial London city lobby, especially surrounding a draft directive to regulate hedge funds and private equity groups. 

The City of London regularly courts journalists and lawmakers in Brussels, including a visit from the city’s mayor Boris Johnson to rally against the hedge funds directive. 

Johnson’s visit was a surprise to Rasmussen, he said, until he learned that the Mayor’s budget was 77% financed by hedge funds and private equity groups, according to research done by the Danish socialist’s team. 

The British Conservative party, of which Johnson is a member, received donations from hedge funds and their managers to the tune of £3.64m in the first six months of 2009, according to the same research done by the PES. 

Lists still not transparent 

Alter-EU’s report is the second of its kind on the composition of expert groups. 

In March the Commission assured ALTER-EU it would publish lists of experts sitting on advisory groups by the summer (EURACTIV 26/03/08). 

The Commission’s comments came after the lobbying transparency group called on the Commission to dissolve some of its expert groups, warning that in some cases “the predominance of industry representatives” was putting the public interest “at risk”. 

Though there have been improvements since March, it is still not clear whether individuals are acting in a personal capacity or if they are affiliated with a financial employer, says Yiorgos Vassalos, one of the report’s authors. 

In addition, he claims, some lists do not say how many members are in a given group – a prerequisite for expert groups – raising doubts about how transparent the Commission is being. 

The pan-European consumer group, BEUC, agreed with the report’s findings that the commission’s expert groups were overloaded with industry representatives. 

BEUC admitted to feeling “railroaded” into agreeing to things and says the executive sometimes does not ask for their position on time, meaning they fail to influence policymaking. 

The EU executive has long consulted expert committees - comprised mainly of government experts from each member state and representatives of civil society, industry and scientists - to better address the technicalities inherent in the application of EU legislation, via a practice known as 'comitology' (see our Links Dossier). 

'Comitology' first emerged forty years ago as it became increasingly apparent that the EU institutions themselves lacked the resources to develop implementation rules for every EU law. The procedure was reformed in 2006 to give the European Parliament the right to revoke Commission decisions on the implementation of legislation (see EURACTIV 06/07/06).

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