Financial regulation

Noonan addresses reporters outside the finance ministers' meeting in Luxembourg Friday

When EU finance ministers reconvene on Wednesday for a last-ditch attempt to strike a deal on bank bailout rules after they couldn’t get one in the early morning hours Saturday, it won’t be the first time fights over Europe’s “banking union” have gone to the eleventh hour before a major EU summit.

The last major decision – how many banks would be overseen by a new single supervisor based at the European Central Bank – also took one failed finance ministers’ meeting late last year before they reached a deal on the eve of a summit.

But EU leaders are sounding a bit more cautious this time than last December, since the issues at hand – who will pay for bank bailouts – are far more politically sensitive than last time around. They involve both power and money. Last time, it was just power.

To get an idea of where things lie after the Friday night/Saturday morning 18-hour marathon, we’ve posted this three-page proposal tabled by Michael Noonan, the Irish finance minister who chaired the meeting as holder of the EU’s rotating presidency, near the end of the debate. Read more

Pity the Lithuanians. When assuming the EU rotating presidency next month they will inherit the mother of all regulatory backlogs, especially when it comes to the financial sector. It is an impossible and thankless task, a numbingly complex pile of half-negotiated, often paralysed and always contentious directives and regulations, which the European Commission is still adding to with some gusto.

There are going to be around 25 financial services files for the Lithuanians to shepherd through, either in negotiations between member states, or directly with the European parliament. The poor Lithuanian officials strong-armed to work the files will have to become instant experts. Most of the proposals will require countless long meetings with member state or parliamentary negotiators; some will need ministerial input and some sacrificial political blood.

The demands could dwarf the resources and time available. After March 2014, the parliament essentially shuts shop for European-wide elections, so the Lithuanian presidency, which runs through the end of this year, is pivotal. Some countries only have one or two financial services attachés covering the bulk of files. Getting MEPs together for talks is like herding cats. Getting them to agree is even harder, especially in this pre-election environment. A lot of the initiatives will not make it through; their fate is then in the hands of the next leaders of the EU’s parliament, commission and council. Read more

I didn’t know whether to laugh or cry when I heard the news on Tuesday that the German authorities were to impose a temporary ban on certain types of transactions – known as “naked short-selling” – in eurozone government securities.  Laugh, because it seems more than a coincidence that the announcement was made just before parliament in Berlin was due to open a debate on authorising Germany’s contribution to the €750bn international rescue plan for the eurozone. The ban looks like a piece of raw meat thrown to legislators who labour under the delusion that the eurozone’s debt crisis is all the fault of “speculators” and are eager for revenge.

Cry, because the German announcement underlines how the eurozone’s leaders, after finally appearing to get on top of events with the financial stabilisation plan unveiled on May 10, are once again misjudging the dynamics of the crisis.  To cite another example, Italy’s central bank has just decreed that Italian banks will not be required to adjust their capital ratios if eurozone government bonds in their portfolios fall in value.  What this will mean in terms of the credibility of financial data published by the banks, I hate to think. Read more

The inimitable Nicolas Sarkozy couldn’t resist the temptation to term last week’s allocation of jobs in the new European Commission as a victory for France and a defeat for Britain.  In particular, the French president crowed, he had outmanoeuvred the Brits by securing the internal market portfolio, which is responsible for financial regulation, for Michel Barnier, the new French commissioner.

It was certainly a little undiplomatic for Sarkozy to uncork the metaphorical Champagne bottles so soon after the announcement of the new jobs.  There are many raw nerves in the British government and in the City of London about how various EU measures in the pipeline may damage the UK’s financial sector.  Sarkozy touched every one of those nerves with a rod of fire. Read more

Ask a minister in a European Union government what post their country hopes to get in the next European Commission, and the response is the same every time – something important to do with the economy.  Well, you can’t blame people for not hurrying to step into the shoes of Leonard Orban, the Romanian commissioner for multilingualism.

On the other hand, there aren’t enough top economic jobs for Commission president José Manuel Barroso to satisfy everyone.  Truth to tell, the Commission looks too big with 27 members.  But that’s the way it is, and that’s the way it will stay under the EU’s Lisbon treaty.  A guaranteed seat on the Commission seems a simple, visible way of making a country’s citizens feel connected to the EU. Read more

Since February 1999, when the Organisation for Economic Co-operation and Development’s anti-bribery convention came into force - with the aim of reducing bribery of foreign officials in international business deals - the US has brought 103 cases, Germany more than 40, France 19 and the UK just one.  So says “Global Corruption Report 2009: Corruption and the Private Sector”, a study published on Wednesday by Transparency International, the anti-corruption watchdog.

From a British point of view, the report makes uncomfortable reading.  “UK companies still have a long way to go to increase their awareness and adopt robust anti-bribery compliance programmes,” it says. Read more

What’s the connection between martial arts and European financial market regulation?  Answers in Bulgarian, please.  Because the most colourful member of the newly elected European Parliament’s powerful economic and monetary affairs committee is surely Slavi Binev, a Bulgarian MEP

Binev is a Taekwondo champion whose parliamentary website describes him, with little exaggeration, as “the most recognisable figure in the history of martial arts in Bulgaria”.  Perhaps I should add that he is also a wealthy man who belongs to Bulgaria’s ultra-nationalist Ataka party and who runs a company specialising in nightclubs, construction and finance.  He knows, shall we say, how to look after himself. Read more