globalcrisis/globalchange NEWS September, 17th 2018
A helpful survey, how financial lobby groups averted EU-regulation in the past 10 years from Corporate Europe Observatory, an NGO that provides facts and analysis about lobby groups, international trade, food and agriculture (especially the impacts of GMO-seeds).
How the financial lobby won the battle in Brussels
September 13th 2018 The financial lobby
Despite their responsibility for the 2008 crash, the financial sector has successfully avoided major reform in the decade since. Their army of lobbyists has won almost all the major battles, leaving new legislation full of loopholes and conditions similar to those that created the crash in the first place.
Corporate Europe Observatory shows how the past ten years of financial lobbying have kept us vulnerable to future crises and costly bailouts.
Those days in September 2008, watching the proverbial towers of global finance crumbling, were both scary and full of hope. Scary because the financial crash unfolding was bound to create misery and poverty in the coming months and years, yet hopeful because this could have been a unique opportunity to secure much-needed radical reforms of the financial markets. The crisis itself had origins in the light-touch regulation of the preceding years, a fact acknowledged even by some of its architects. Now, in the face of acute and disastrous systemic failure, surely a U-turn would follow.
Here a bite-sized overview of our analysis from 10 years of monitoring the finance lobby: Finance lobby still shapes EU agenda despite historic meltdown
Yet that reform never materialised. It’s not that nothing has changed. Supervision has been increased and various kinds of ‘emergency brakes’ introduced that allow regulators to step in with more tools if a severe risk is on the rise, say if a big financial corporation is in dire straits. But a decade on, initial hopes that the crisis would lead to a rethink of financial markets appear naïve. Over the past ten years all ambitious ideas have been watered down, delayed almost indefinitely, or simply brushed aside, in no small part due to the power of the financial lobby and the deep bonds between decision-makers and financial corporations.
Commission moves fast to let bankers set the agenda
The European Commission moved fast in the days and weeks after the crisis broke. In September 2008 Commission President Barroso announced he would set up a high-level advisory group to evaluate what reforms to financial regulation would need to be made. In mid-October his group was approved by the EU’s member states. It was a group with deep links to some of the very institutions that caused the crisis. Of a group of only eight, one sitting member of the group had links to the infamous Lehman Brothers, another with Goldman Sachs, yet another with Citigroup, and the Chair Jacques de Larosière was tied to BNP Paribas. These ‘wise men’ would hardly take us very far. They delivered the ‘de Larosière report’ that set the agenda for the only EU institution with the power to introduce draft legislation, the European Commission.
This was a somewhat familiar pattern: by 2008 the Commission already had a long held a habit of consulting widely with financial lobbyists in its attempt to deepen the single market in financial services. For example the Commission had built up a tradition of gathering bankers and fund managers for a thorough chat well before anything was proposed. Sure enough, an investigation into the ‘expert groups’ the Commission consulted over the toxic issues related to the crisis, showed this is exactly what happened. The European executive had allowed financial lobbyists to take the role of advisors, bending the ideas of the Commission to their advantage, and in some cases by preventing initiatives altogether, as in the case of private equity funds and investment funds. In that area, on the advice of an advisory group set up in January 2006 dominated by lobbyists, the Commission decided not to propose rules on hedge funds.
Hedge funds: meek measures in return for free passage
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