Onno Ruding, a paid advisor to Citigroup and a member of President Barroso’s ‘committee of wise-men’ on financial supervision (known as the de Larosière group), presented the group's findings to a select audience this week at an event in Brussels.
The event took part at the Centre of European Policy Studies (CEPS), a Brussels-based corporate-funded think tank, whose Board of Directors is chaired by Ruding.
Ruding was joined on the panel by Alistair Sutton from the law firm White & Case as facilitator and high-level Commission official David Right (DG Internal Market) as co-speaker.
All three – as well as many lobbyists in the audience – underlined the ‘independence’ of the de Larosière group, which is astonishing given that four out of eight members of the group are closely linked to giant financial corporations, a fifth was the head of the UK Financial Services Authority that completely failed in its tasks and a sixth works for a company whose clients include major banks, as reported in ‘Would you bank on them’.
Ruding, insisted he was an independent voice, despite the fact that he is a paid member of Citigroup’s advisory board. Citigroup owns Citibank which is deeply involved into the crisis, on the verge of collapse and likely to be nationalised
Commission flies the flag for the de Larosière report
David Wright, the deputy director-general of DG Internal Market is mentioned in the de Larosière report as member of the group’s secretariat and indeed DG Internal Market has been working feverishly for weeks to help finalise the report. Nevertheless, a disclaimer on the report explicitly states that it expresses the view of the group’s members. Does that mean that the role of the Commission’s secretariat was to work under the orders of the bankers in the de Larosière group, to act as their secretaries?
The Commission was very quick to ‘broadly endorse’ the report just after it appeared. Apparently, having typed it the Commission didn’t need much time to think about its content. Now, it is also giving it the highest status. Wright claimed that the EU is the first international actor to have a specific agenda on the necessary reform of the financial markets and this is the de Larosière report.
At the same time, the Commission seems to be in no hurry to implement the report’s recommendations. The original ambition of the group was to contribute to the Commission’s preparations for the EU Spring Summit in March. Now, Wright says the proposals will be submitted to the Council ‘before May 2009’. Some ‘important leaders’ are supposed to have already ‘commented positively’ on the de Larosière report but finance ministers are expected to discuss it thoroughly. A public hearing will take place somewhere in April.
Ruding sticks to his de-regulation legacy?
Ruding felt the need to emphasise from the beginning that the mission of the group was not to call for more regulation and supervision. He accepted that some stricter rules may be needed but on the other hand he warned against over-regulation, just as he has done for the last 30 years. With the financial sector hanging over the edge of the cliff and threatening to drag the rest of the economy with it after a decade of frantic deregulation, Ruding finds it coherent to warn against ‘going to the other extreme, the one of overregulation’.
‘What we need is better regulation and supervision’ says Ruding. The main regulatory measures proposed by the de Larosière group are to be implemented by the European Central Bank, without changing its current non transparent status and in general without questioning the fundamentals of financial self-regulation.
While the world is suffering from the deepest economic crisis in 70 years, caused by gross under-regulation of the financial sector, it is clearly business as usual in the Brussels bubble…
Bankers or academics?
Meanwhile, the European Commission has updated its register of expert groups so it now includes the de Larosière group. Remarkably, the register entry refers to all eight members as ‘academics’, when most of them are not linked with any university. It is interesting to see that in the register entry the Commission has BNP-Paribas as the ‘body represented’ by Mr de Larosière and Grupo CMID for Mr Fernandez. It should perhaps explain how their ‘academic’ status is compatible with representing these corporations in this high level group.
This is typical of the Commission’s new approach - corporate advisors do not have any conflict of interest because they are there in a ‘personal capacity’.