Lawmaker: ‘Financial regulation must be tailored’

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.

Wolf Klinz MEP (ALDE, Germany) is chairman of the European Parliament’s special committee on the financial crisis. 

He was talking to EURACTIV’s Claire Davenport.

To read a shortened version of this interview, please click here

At today’s inaugural meeting there were warnings that previous European Parliament committees had called on the expertise of actors who were unqualified for the job. And so the question was raised on whether the pool of experts will favour financial actors over academics. What is your view?

I consider myself to be independent enough not to be overwhelmed by so-called financial experts or representatives of financial institutions. 

You are affiliated to the Federal German Party (FPD), which has an overtly pro-business view of economic policy. Were you surprised that this role did not go to a socialist who would advocate a tough approach on regulation?

I do not look at regulation from an ideological point of view. We should have regulation where it is needed. There are areas where I do not see the need for regulation. For instance: remuneration. In the member states there are proper governance bodies, shareholder meetings, and supervisory boards. We already have bodies that should consider themselves responsible for implementing proper remuneration policies in their companies. 

Are there any areas where you would ask for more EU regulation? 

Yes, with the excesses that we have seen in the derivatives market, for instance, there I think we should really make sure that over the counter derivatives trading should go via a central clearing facility. But regulation must be tailored to specific needs. The Commission proposal to regulate alternative investment funds is going too far. 

Which elements of the regulation do you disagree with? Are you against putting a cap on the amount of leverage used by private equity houses and hedge funds? 

Yes, absolutely.

What about so-called passports for funds seeking access to the European market? 

I am for a passport but I want the existing private placement regimes to go on existing, so that fund managers sitting in New York managing a fund that is domiciled in the Cayman Islands can also be offered in Europe. I do not want Europe to be turned into a fortress and a prison at the same time. 

The notion of sharing the burden of future bank bailouts between member states has been recognised as the single greatest problem the EU will face in financial regulation. What will this committee do to move closer to an idea of burden sharing? 

We will have to and we shall wrestle with this question. In this committee we will have to ask the question ‘what would have been the benefit if Europe had found a common answer to the crisis more quickly?’ rather then acting one by one. 

So were you disappointed that the Commission did not propose a pan-European supervisor but established the European System of Financial Supervisors, a body that will pool the resources of the national supervisors? 

Yes I was. I personally would have gone a step further than the Commission’s concept. I think industry is more willing to accept a pan-European solution than the commission or the supervisors. 

Why is that? 

Well because people on the ground see the need and benefit of it – those that work cross-border of course. The crisis has shown that in many areas we need a really European approach. 

What is a European approach? 

We have a single currency and perhaps increasingly so. We have to make sure in order to secure the success of single currency that we have a common European policy. We cannot have separate fiscal and economic policy. 

Does that include taxation? 

To a certain extent, yes. I am not looking for a single tax system. But we should have a consolidated tax base. We should all calculate tax based on a company’s profits, so on the same basis and then individual member states can apply their varying tax rates. But at least the basis of that calculation is the same. 

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