Olivier Hoedeman argues in New Europe magazine that the EU Parliamentary inquiry into the financial crisis must examine the role of lobbying.
See http://www.neurope.eu/articles/96861.php
Parliament inquiry into financial crisis should address role of lobbying
Olivier Hoedeman, New Europe, 11 October 2009 - Issue : 855
THE European Parliament will this week launch a new special committee on the financial, economic and social crisis. Over the next 12 months, the committee will “analyse and evaluate the financial, economic and social crisis” and make recommendations for “measures or initiatives to be taken”. The new committee has an contribution to make, especially if it opts for a comprehensive evaluation of the causes of the financial crisis, including the shortcomings of decision-making on financial-market regulations.
There is strong evidence that industry lobbying has been a major factor in both the US and in Europe in weakening the regulation of financial markets – regulation that might have prevented the economic meltdown.
And, despite the disastrous effects of the crisis, big banks, hedge funds and other investment funds continue lobbying against effective regulation of their activities, as if nothing had happened. The new committee should therefore assess the impact of financial services lobbyists on regulatory decisions of the Commission and the Council, but also of the Parliament itself. The goal should be to develop recommendations for how to safeguard democratic decision-making and adequate regulations that can prevent financial meltdowns in the future.
Based on conversations with MEPs, advisers and assistants that followed the Parliament’s decision-making on financial market regulation 2004-2009, here are some questions and suggestions for the new committee to consider. The European Parliament and the Committee on Economic and Monetary Affairs (ECON) in particular faced ”extremely vigorous”
lobbying pressure, as one centre-right ex-MEP put it, from financial service-sector lobbyists. Input from civil-society groups, on the other hand, was very limited. According to one centre-left MEP, the weakest point in Parliament decision-making on financial regulation in recent years was the fact that citizens had no voice to express their concerns.
The MEP suggests that funding for civil society to engage more actively would help address the very unbalanced lobby pressure. The European Parliament in 2007 called upon the Commission to create “a European budget line to fund financial market expertise in consumer and SME organizations”. As the Commission has not implemented this proposal, it would be important for the new committee to reiterate the need for support to enable non-industry stakeholders to raise their voice on these important matters.
Moreover, due to the complexity of financial-market legislation, it may have been tempting for MEPs in the ECON committee to rely on advice from financial sector lobbyists with more time and resources at their disposal. The intense work pressure of MEPs, not least the ECON committee, increases this risk of dependency. The Parliament in the previous term decided on a very large number of EU directives covering a very wide range of financial market sectors and issues. On some dossiers, more than 1,000 amendments were tabled. A significant share was drafted by financial-services lobbyists and submitted by MEPs, of which some ended up as EU legislation. It would seem wise, therefore, to explore how to expand the options of MEPs to access unbiased expertise on financial-market issues, for instance by strengthening the Parliament’s own in-house research department Another, perhaps more controversial problem that needs to be addressed is the fact that some MEPs involved in decision-making on financial-market issues were too closely connected to the financial-services industry. These MEPs had worked for, stillworked for, or wanted to work for the same industry that they were responsible for regulating. The committee might want to assess whether these links resulted in decisions that reflected the interests of the industry, but not necessarily the public interest. Addressing these problems would require a review of the Parliament’s conflict of interest rules.
Finally, in the coming months the European Commission and the Parliament will restart negotiations about a joint lobbytransparency register. This will provide an opportunity to overcome the weaknesses of the Commission’s current register, which is ignored by a majority of EU lobbyists, not least by those from the financial sector. A high-quality register would enable MEPs, media and interested citizens to see at a glance who lobbies on financial-market regulations, on whose behalf and with what budgets. The special committee could make an important contribution to achieving this breakthrough in transparency.
