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BackMany politicians are currently lacking the courage with regard to regulating the financial markets. The loudly heralded reforms have been flogged to death with the result that there is hardly anything left. There does not appear to be any intention, either internationally or at European level, to draw lessons from the crisis. This was not only demonstrated last week when the G20 Finance Ministers met, but also during debates in the European Parliament. Basic tenor: the banks have already suffered enough.
No agreement of the G20 with regard to bank taxes
The debt crisis in Greece does not only put the energy of EU politicians to the test. It also overshadows another large European and international concern, the regulation of the financial markets. Who pays for the crisis and how can a new crisis be prevented? These are the central questions. The Finance Ministers of the 20 most important global economies (G20) were not able to agree at the weekend, to make the banks participate in the horrendous costs for the crisis, they were responsible for. Neither the Financial Transaction Tax, demanded by AK and ÖGB, nor a bank levy or a tax on profits and bonuses of the banks, as recommended by the latest report of the International Monetary Fund (IMF), were able to command a majority. The discussions will be continued in June.
Capital of the banks dangerously low
The situation regarding the regulation of the banks is similar. One of the most important of the many problems, which the crisis has brought out into the open, is that the banks have too little capital for their risky speculative transactions. The combination of high risk and low capital is particularly critical, when things go wrong. The simple recipe, which all experts agree upon, is more capital.
Banks remove their sleeve protectors
For that reason, the European Commission has submitted two proposals for changing the current Capital Requirements Directive, which has turned out to be useless. These proposals are currently discussed in the European Parliament (EP). There is, however one problem: the banking lobby has once again deployed its combat troops to intimidate MEPs. One example for the brazen approach of the banks came from the British MEP Arlene McCarthy (S&D). “This will have an effect on your voters”, was the bold message she received from representatives of two major banks.
Not standing in the way of the banks is the smart thing to do
It is therefore of little surprise that MEPs are now recoiling from deciding stricter capital regulations for the banks. Instead, they are trying to buy time and work on strategies as to how they can make the public believe that they are about to make some decisions whilst in reality they do not make any decisions at all. A prime example is the Liberal Swedish MEP Olle Schmidt. “If we are wise, we will decide not to stand in the way of the market; it has suffered enough”, said Schmidt. Or the British Tory MEP Vicky Ford, who suggested not to do too much in order not to put bank lending to the manufacturing industry at risk.
Taking one step at a time
The Austrian MEP Othmar Karas (EPP), who on other occasions also came out in favour of Europe going it alone with regard to regulating the financial markets, was surprisingly cautious and restrained. Now was not the time for emotions and Europe going it alone, said Karas. Europe should introduce its regulations at the same time as the USA, commented the influential Austrian.
How much more are we supposed to pay?
The Green MEP Pascal Canfin got right to the point of the successful tactics used by the banking lobby. “One text is played off against another”, said the Frenchman. And indeed, so far the banks have been successfully suggesting to politicians that they could not financially cope with the combined regulation proposals, which are currently on the table. As a result, each legislative proposal triggers the reflex outcry of the banks: “How much more are we supposed to pay?” In reality, however, they have not paid a single cent for the social consequences of the crisis; their activities are once again taking place in the casino, where they distribute massive bonuses.
Will we soon face the same in the EU?
It was once again Arlene McCarthy, who came right to the point of the problem. Wall Street would pay 40 billion $ to US Senate Banking Committee members. “Will the same happen in the EU?” was her question. Labour representatives such as AK and ÖGB and the civil society, must do as much as they can to make the public aware of the danger of the gradual erosion of democracy. Lessons need to be learned from the crisis and the ones who were responsible for it, have to pay their contribution.
The debt crisis in Greece does not only put the energy of EU politicians to the test. It also overshadows another large European and international concern, the regulation of the financial markets. Who pays for the crisis and how can a new crisis be prevented? These are the central questions. The Finance Ministers of the 20 most important global economies (G20) were not able to agree at the weekend, to make the banks participate in the horrendous costs for the crisis, they were responsible for. Neither the Financial Transaction Tax, demanded by AK and ÖGB, nor a bank levy or a tax on profits and bonuses of the banks, as recommended by the latest report of the International Monetary Fund (IMF), were able to command a majority. The discussions will be continued in June.
Capital of the banks dangerously low
The situation regarding the regulation of the banks is similar. One of the most important of the many problems, which the crisis has brought out into the open, is that the banks have too little capital for their risky speculative transactions. The combination of high risk and low capital is particularly critical, when things go wrong. The simple recipe, which all experts agree upon, is more capital.
Banks remove their sleeve protectors
For that reason, the European Commission has submitted two proposals for changing the current Capital Requirements Directive, which has turned out to be useless. These proposals are currently discussed in the European Parliament (EP). There is, however one problem: the banking lobby has once again deployed its combat troops to intimidate MEPs. One example for the brazen approach of the banks came from the British MEP Arlene McCarthy (S&D). “This will have an effect on your voters”, was the bold message she received from representatives of two major banks.
Not standing in the way of the banks is the smart thing to do
It is therefore of little surprise that MEPs are now recoiling from deciding stricter capital regulations for the banks. Instead, they are trying to buy time and work on strategies as to how they can make the public believe that they are about to make some decisions whilst in reality they do not make any decisions at all. A prime example is the Liberal Swedish MEP Olle Schmidt. “If we are wise, we will decide not to stand in the way of the market; it has suffered enough”, said Schmidt. Or the British Tory MEP Vicky Ford, who suggested not to do too much in order not to put bank lending to the manufacturing industry at risk.
Taking one step at a time
The Austrian MEP Othmar Karas (EPP), who on other occasions also came out in favour of Europe going it alone with regard to regulating the financial markets, was surprisingly cautious and restrained. Now was not the time for emotions and Europe going it alone, said Karas. Europe should introduce its regulations at the same time as the USA, commented the influential Austrian.
How much more are we supposed to pay?
The Green MEP Pascal Canfin got right to the point of the successful tactics used by the banking lobby. “One text is played off against another”, said the Frenchman. And indeed, so far the banks have been successfully suggesting to politicians that they could not financially cope with the combined regulation proposals, which are currently on the table. As a result, each legislative proposal triggers the reflex outcry of the banks: “How much more are we supposed to pay?” In reality, however, they have not paid a single cent for the social consequences of the crisis; their activities are once again taking place in the casino, where they distribute massive bonuses.
Will we soon face the same in the EU?
It was once again Arlene McCarthy, who came right to the point of the problem. Wall Street would pay 40 billion $ to US Senate Banking Committee members. “Will the same happen in the EU?” was her question. Labour representatives such as AK and ÖGB and the civil society, must do as much as they can to make the public aware of the danger of the gradual erosion of democracy. Lessons need to be learned from the crisis and the ones who were responsible for it, have to pay their contribution.