The US repelled EU proposals on common rules for banks

First round of the EU/United States trade and investment negotiations: Stakeholder event, 10/07/2013, (EC Audiovisual library).

First round of the EU/United States trade and investment negotiations: Stakeholder event, 10/07/2013, (EC Audiovisual library).

The European Commission and more precisely the European Commissioner Michel Barnier fights a battle in two fronts over the financial sector’s future. One internal with Germany on EU banking union and another one external with the US on common rules for banks. Understandably in both fronts he has the full backing of the Commission and its President Manuel Barroso. Let’s take one thing at a time.

The Germans protect their banks

In the internal front the confrontation is around the character of the future EU Banking Union and its pillar, the bank resolution mechanism. The Commission has proposed a strong central bank resolution authority under its own roof, with the EU’s executive arm to have the last word on which bank should be resolved. Germany is strongly opposing this prospect. Currently the issue has been scheduled to be discussed and decided upon in the EU two legislative bodies, the European Parliament and the European Council.

Most likely there will be no further frictions over this crucial subject until the German elections of 22 September. The reason is that neither the Commission nor the German government have an appetite to see this topic acquiring larger dimensions and probably become an electoral issue. In any case Germany will be protecting its banks, despite the fact that Berlin insists that they don’t need it. As a result Barnier’s internal battle will be decided in a few months.

The easy part

As for the Commissioner’s external confrontation it just commenced yesterday in Washington where Barnier is on official visit. The European Commissioner started his visit in the US with a relative easy success. He and the United States Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler announced a ‘Path Forward’, regarding their “joint understandings on a package of measures for how to approach cross-border derivatives”. In reality this means nothing. If the two sides really wanted to regulate this hundreds of trillions over the counter business, the agreement would have been about measures and not ideas.

In any case yesterday’s agreement between the Commission and the CFTC over a ‘Path Forward’ obviously lacks any concrete content and what there is to it seems to relate rather to goals rather than measures. According to a Commission memo it “responds to the G20 commitment to lower risk and promote transparency in the over-the-counter (OTC) derivatives markets, which were are at the heart of the financial crisis. The CFTC and the European Commission share a common objective of a steadfast and rigorous implementation of these commitments. Together with the European Securities Market Authority (ESMA), the European Commission (EC) and the United States have made significant progress in their regulatory reforms”. It is more or less a citation of targets. On top of that both those bodies, the Commission and the CFTC, don’t have any legislative mandate.

To be noted though that the European Commission has already threatened 13 giant banking groups and their two support bodies {Bank of America-Merrill Lynch, Barclays, Bear Stearns (now part of JP Morgan), BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, UBS and the Royal Bank of Scotland, Markit, a financial information firm, and the International Swaps and Derivatives Associations (ISDA)} with a 10% fine on their global turnover, for forming a cartel and setting prices in the over the counter trade of Credit Default Swaps and Derivatives.

Breaking news

However the breaking news came from Barnier’s speech in the Brookings Institution, one of the leading US think tanks. The European Commissioner delivered there a speech entitled “Interdependent swaps markets need interactive cross-border rules”. Those of the US financial industry present must have started already feeling uneasy only by hearing the title of the speech. It is well-known that the American bankers and financiers despise any rules binding their free riding industry, let alone international ones.

Barnier however became more concrete and asked for the inclusion of financial regulation issues in the ongoing negotiations between the EU and the US for the conclusion of a free trade and investments bilateral agreement. He said “This brings me to transatlantic trade in general. As you know we launched our EU-US trade negotiations last week. These are about growth and leadership. Growth in terms of our economies and jobs for our citizens. Leadership because we can find solutions to trade problems that we can’t find in multilateral discussions. Those solutions will carry weight because they would apply to half of the world economy. They would form a good basis for future global discussions when the time is ripe. The EU is committed to including financial services regulation in this growth and leadership agenda”.

Before hearing that, the American bankers must have been at ease, probably enjoying the French accent of the speaker. The agreement between the CFTC and the European Commission of that same morning was about ideas and goals, no concrete measures there. So nothing to fear. All of a sudden however this EU Commissioner proposed to the US to agree and introduce concrete rules on the sacrosanct American banking and financial industry, operating in complete liberty. The alarms sounded loud, and the answer came swiftly not from those at present, but from the most competent lips, the U.S. Treasury Secretary, Jacob Lew.

He stressed that “prudential and financial regulatory cooperation should continue in existing and appropriate global platforms, such as the G-20, Financial Stability Board, and international standard setting bodies, consistent with existing ambitious international timelines”. In short Lew told Barnier that the US-EU talks for a trade agreement is not the platform to discuss finance. As if the US banks do not belong to the real world but to a higher level of existence. On top of that Barnier probably learned from the Americans that the trade talks are already closing…no room for anything more in it…

As everybody knows, the international fora the US Secretary proposes would never arrive at discussing, let alone adopting and introducing concrete rules applicable on the global financial/banking industry. Of course the G-20 leaders when getting together talk loudly about the problems the financial industry creates to the real economy and the real people. They don’t forget that real people also vote. But to come up with concrete ideas and introduce strong measures globally to arrest the rampant bankers, and stop them from usurping other people’s money? No sir never! We live in a free world! What did you think?

In short Barnier is to lose the battle with the US. Let’s hope that he will win the confrontation with the Germans. Any how he must have understood by now that what some big countries cherish more today is their…banks.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Sanctions on Russia to be the biggest unity test at this European Council

4 radical shifts required to achieve universal health coverage worldwide

Further reforms needed for a stronger and more inclusive Argentine economy

Africa-Europe Alliance: European Commission committed to a sustainable African agri-food sector

On World Day to Combat Desertification, UN shines spotlight on ‘true value’ of land

Are you breathing plastic air at home? Here’s how microplastics are polluting our lungs

Summertime Consultation: 84% want Europe to stop changing the clock

Commission launches debate on more efficient decision-making in EU social policy

Can We(esterners) ever understand (the) Chinese

Remarks by High Representative/ Vice-President Federica Mogherini at the press conference following the EU-China Strategic Dialogue

An FTA between EU-US to hurt South Korea

UN food agency appeals for access to key storage facility amid fight for Hudaydah

Return of Kuwaiti property by Iraq, signals hope of ‘full normalization’ between nations: UN Chief

EU budget for 2019: do more for the young, SMEs and the climate, urge MEPs

‘Jerusalem is not for sale’ Palestinian President Abbas tells world leaders at UN Assembly

Why European manufacturing SMEs in the South face fatal dangers

A long German political winter is on the way

The EU Parliament backs the ‘Right2Water’ initiative all the way through

Consumer protection: Deal on EU-wide rules for those sold faulty products

The Parliament rejects cultivating the wrong seeds of the Commission

The European Internet is not neutral and neither is the Commissioner

A Europe that delivers: EU citizens expect more EU level action in future

Human rights are ‘key’ for economic policymaking says UN expert

EU-US to miss 2015 deadline and even lose Germany’s support in TTIP’s darkest week yet

‘Alarming levels’ of methamphetamine trafficking in Asia’s Mekong, UN warns

Brexit talks: Today the world to hear of a predictable failure

Not a single child spared the ‘mind-boggling violence’ of Yemen’s war

Central African Republic: UNICEF outlines key actions so fresh peace deal can make real difference for children

Crimean crisis: not enough to slow down European indices

FROM THE FIELD: Weather reports come to aid of Uganda’s farmers

EU economy: Between recession and indiscernible growth

Estonia is making public transport free

Do electronic cigarettes produce adverse health effects?

EU budget: Commission proposes €1.26 billion to reinforce the European Solidarity Corps

Climate change: Direct and indirect impacts on health

Eurozone: A Sluggish economy offers no extra jobs

UN forum to bring ‘big space data’ benefits to disaster response in Africa

EU to negotiate an FTA with Japan

EU Visa Policy: Commission welcomes agreement to strengthen EU visa rules

Let us keep ‘their spirit of service alive’: Guterres leads tributes to UN workers who died in Ethiopia crash

Prisons are failing. It’s time to find an alternative

Blockchain can change the face of renewable energy in Africa. Here’s how

MEPs want to ensure sufficient funding for Connecting Europe’s future

Youth Entrepreneurship Issue of the month: JEN, organisers of JADE October Meeting, on why JEs should come together

Peacekeeping chief highlights challenges facing UN Police

Why medicine is relevant to the battle against climate change

Sweden gives all employees time off to be entrepreneurs

Here are 3 alternative visions for the future of work

Tackling Youth Unemployment

New EU short-stay visas: more advantages for legitimate travellers

Trump badly cornered at home by agribusiness and steel consumer lobbies: Trade

UNESCO experts ready to assist reconstruction of iconic Notre Dame, following devastating blaze

The JADE Spring Meeting is about to begin

The EU learns about fishing and banking from tiny Iceland

Congrats to the #FutureofMalta: a new age of voting

State of the Union 2018: The Hour of European Sovereignty

Amending Guatemala ‘reconciliation law’ would lead to unjust amnesty, warns Bachelet

Protests, violence in Haiti prompts international call for ‘realistic and lasting solutions’ to crisis

Romanian Presidency priorities discussed in committees

Yemen: ‘A great first step’ UN declares as aid team accesses grain silo which can feed millions

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s