EU Referendum

Showing posts with label financial regulation. Show all posts

Bloomberg has an article about a meeting at our own Institute of Economic Affairs that discussed the possible, nay probable, effects of more EU regulation of the financial markets. It was off the record but a few participants agreed to be quoted. What use an off the record meeting about financial regulations might be to anybody is not clear but the IEA loves to seem important.

Things are not going well. The financial regulations may affect the City adversely. Or so opines Ruth Lea, director at Arbuthnot Banking Group Plc and, as our readers may recall, director of the now moribund but formally still living Global Vision.

We have written about this group before (here and here for example) and we did not think highly of it. There seemed to be a great deal of retreading of old ground (people will listen if we tell them about the economics, yaddda-yadda) and their proposed aim seemed completely irrational.

Global Vision's view was that Britain should renegotiate a different relationship with the EU and its member states. I shall not weary our readers with a rehash of all the arguments why that can be described in technical terms as utter tosh. They are there in the postings I have linked to.

It would appear that Ruth Lea has inched away from that position.

"I am extremely worried about the City of London," said Ruth Lea, a director at Arbuthnot Banking Group Plc, who agreed after the Sept. 24 meeting at the Institute of Economic Affairs for her comments to be published. "Britain may be able to influence EU regulation, but we won't be calling the shots. Britain should consider the nuclear option of leaving the EU."

Mind you, this is something she said to the journalist. Did she say it in so many words at the meeting? This is not clear.

Other contributors made it clear either with approval or disapproval that what is at issue is not economic development or fear of financial crises; it is the "Anglo-Saxon" way of doing things that the EU is out to destroy.

Let us not at this stage go into what "Anglo-Saxon" might mean or whether it is really in evidence in Britain. What the financial regulations intend to do, according to all those quoted in the article is to undermine or destroy the City of London, the only really big international financial centre in the EU. The fact that these regulations will not help anyone else particularly seems to be irrelevant.

Read the whole piece on Bloomberg. But before you do, let me note one more interesting comment:

"It's good to avoid mentioning London in every single sentence and start looking at this from a European point of view," said Mats Persson, research director at Open Europe, a London lobby group that's critical of EU integration. Persson also spoke at the IEA. "I am Swedish, and I have sympathy for this kind of thinking."

What kind of thinking? More European control of the financial markets because the City is dispensable? Is this quite what we want to hear from our premier glasnost think-tank?

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meltdown[i-meltdown]It was very nearly a year ago, with the first phase of the financial crisis in full flow that I observed: "If, by the end of this crisis – if it ever ends – the EU is not a smouldering wreck, it will emerge stronger, more powerful and more arrogant than before. It will destroy the City of London and what remains of our prosperity with it. It will regulate it to death."

The crisis is not over – just in temporary abeyance - with rumours of a currency crisis building ... and hotly denied.

But, if the financial system is weaker, the EU is not a smouldering wreck (yet) and has thus emerged stronger, taking advantage of the beneficial crisis by launching a major new tranche of financial regulation.

This it did yesterday, to no great fanfare, and with media coverage confined to the financial pages, thus lacking any serious political input that would draw attention to yet another – and very major – EU power grab. On the table is what even the EU commission calls an "important package" of draft legislation, which it tells us "significantly strengthen the supervision of the financial sector in Europe."

The legislation will create a raft new EU institutions, comprising a European Systemic Risk Board (ESRB), which will "detect risks to the financial system as a whole with a critical function to issue early risk warnings to be rapidly acted on", a European System of Financial Supervisors (ESFS), composed of national supervisors, and three new European Supervisory Authorities for the banking, securities and insurance and occupational pensions sectors.

At this stage no one can even begin to assess the long-term effect of these institutions on our financial sector, but what is very clear is that they do involve a substantial transfer of power from national authorities to the EU – the results of which, as history tells us, are bound to be malign.

The system is based on the Larosière report, about which we wrote earlier this year, but so technical and arcane are the provisions that few people will understand their significance and they will thus pass into our legislative system with little comment and no political controversy. And when they do, the UK government will have lost that much more power and will be weaker as a result.

The "colleagues", of course, are gift-wrapping this and giving us a good spiel, with Barroso telling us the aim of the benevolent commission is "to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of euros into the banks."

Furthermore, says Barroso, this European system "can also inspire a global one and we will argue for that in Pittsburgh". Global governance is about to take another lurch into our lives.

Nothing can disguise the nature of this power-grab, but then the "colleagues" do not need to. The deed has already been agreed in principle by the European Council in June when we reported that, in the couloirs of Brussels and beyond, one of our most important wealth generating activities had been "stitched-up, kippered and delivered to the enemy."

We then forecast that as the EU exerted its malign grip, its depredations would not be reported and that which escaped into the public domain would not be understood. The only thing certain, we said, is that we will pay, directly and indirectly, and keep on paying ... until such time as we are forced to leave the EU or go bankrupt.

Nothing has changed. We are just that bit closer to the final outcome – whatever it might be.

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Brown+001[i-Brown+001]"Regulation of City may be handed to Brussels" writes Bruno Waterfield.

Hopes that Gordon Brown would make a stand against the European Commission's financial regulatory proposals, which could see control over the City transfer from London to Brussels, appear to be fading, he tells us.

In The Times, however, we get a little more detail. Brown, it appears, has agreed common EU rules for financial supervision but has refused to accept the new EU financial regulators should have the power to order governments to bail out struggling banks and other bodies.

This still represents a substantial transfer of power to Brussels as there will now be "a single rulebook" of standards for all European financial institutions. And, while the regulators lack the "nuclear option" – for now – they will have powers to oversee and investigate the cross-border banking, insurance and pensions, and securities sectors, and to mediate in disputes between member states.

As you would expect, though, The Independent put a positive spin on this expected defeat, proclaiming: "Brown wins EU battle to keep crisis-hit banks under UK control".

This paper is telling exactly the same story as the others but is typical of the Europhile tendency, talking up a temporary interruption in the torrent of EU measures and playing down the substantial erosions of power that have taken place.

In The Guardian, we see exactly the same trick being played, this time the headline reading: "Brown wins independence from European banking regulator". He has done nothing of the sort, of course – simply warded off the assumption of EU-wide emergency power – but the headline looks reassuring enough for the readers to go back to sleep.

In a few days time, this will be history as far as the media are concerned, leading the commission free to work up its detailed legislation without scrutiny or interference.

The full effects, however, will not be felt for many years but when the City has noticeably slid into obscurity at least we can say we knew when it started and who was at the helm. After Black Wednesday, we now have Brown Thursday.

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