MEPs lay down marker on financial supervision

BRUSSELS - MEPs have laid down a tough marker for national capitals, with a series of reports on financial supervision seen as going much further than an EU leaders' agreement last December.

"We are not going to surrender. We are going to go into battle to convince the council [representing member states]," said centre-right MEP José Manuel Garcia-Mergallo y Marfil during a meeting of parliament's economy committee on Tuesday (23 February).

Mr Mergallo y Marfil, from Spain, is the author of the parliament's report on the proposed European Banking Authority, with the combined package of documents likely to play a key role in shaping the legislature's position on the future shape of Europe's financial supervisory framework.

In the wake of the financial crisis, the European Commission proposed draft legislation to step up supervision of the sector last September, including proposals to create three new authorities in the banking, pension and securities sectors.

But concerns that the new bodies, together with an overarching risk board to monitor Europe's financial sector as a whole, could overly infringe on member state decision-making led national capitals to agree on a watered-down version of the proposals.

Now the co-legislating MEPs are looking to reset the balance, their beliefs on the need for greater supervision galvanised by recent events in Greece.

Amongst other proposals, Mr Garcia-Mergallo y Marfil's is calling for technical banking guidelines to be "as binding as possible", in order to give them "bite," and a central fund into which banks would have to contribute in order to pay for future bailouts.

"The ethos underpinning this report is more supervision, increased Europe and reduced risk for the taxpayer," he told colleagues.

Pensions, markets

Green MEP Sven Giegold presented his report on the European Securities and Markets Authority. Referring to the member state agreement that includes a complex appeals mechanism in case national capitals do not agree with the Authority's decisions, Mr Giegold said the quasi veto "really is taking European legislation to the ridiculous."

Pointing to recent speculative attacks on Greece, he said the Markets Authority should have the power to restrict certain financial practices such as short-selling - betting on a fall in value of a particular asset - "as it has very little to do with the real economy".

Centre-left MEP Peter Skinner, author of the parliament's report on the proposed European Insurance and Occupational Pensions Authority, said greater "checks and balances" needed to be added to the commission's original proposal in this area, but indicated it was preferable to the council's compromise agreement.

The strong divergences in opinion between the reports and member state views, and the ongoing power struggle between EU institutions to gain influence over the proposed new bodies, could threaten to delay European plans to overhaul its supervisory framework.

"As we all know, there is competition between all the [EU] institutions to see how these babies grow up," said Mr Skinner.

Parliament has said it hopes to vote on the financial package as a whole before the summer recess in mid-July, with both MEPs and member states keen to see the new bodies up and running by the end of 2010.