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

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

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

Here’s how drone delivery will change the face of global logistics

The Venezuelan exodus to Roraima and its repercussions

Government internet ban leaves parts of Myanmar ‘in a blackout’, UN expert calls for immediate lifting

What makes a good healthcare professional?

The 3 traps when it comes to blockchain and business – and how to avoid them

EU Banks still get subsidies from impoverished citizens

Facebook has built an AI-based tool that fixes the social network when it crashes

Commission presents first reflections on building a strong social Europe for just transitions

If this is Globalization 4.0, what were the other three?

A Sting Exclusive: “China-Africa Cooperation Sets a Fine Example of South-South Cooperation”, by China’s Ambassador to EU

EU/African, Caribbean and Pacific partnership: MEPs list key aims for renewal

Towards the new era of medicine

Fighting against the Public Health System dismantling means guaranteeing assistance to all

Rising number of young people excluded from jobs, education and training

Privatization and public health: a question of Human Rights

Yemen war: UN chief urges good faith as ‘milestone’ talks get underway in Sweden

The Greta effect? Why businesses are more committed to climate action in 2020

Empty stadiums and online streaming: how coronavirus is affecting the media industry

New rules to help consumers join forces to seek compensation

French election: Will France vote for a reformed or no EU?

How women in developing countries can harness e-commerce

Teachers launch a free ebook to help children cope with the pandemic

What would happen if we removed cars from cities?

Netherlands: Budget MEPs back €1.2m in job-search aid for 450 redundant workers

Cities are especially vulnerable to COVID-19. These organizations are leading the urban response.

Protecting farmers and quality products: vote on EU farm policy reform plans

The key takeaways of G7 Summit in Canada

More answers from Facebook ahead of Parliament hearing today

5 ways COVID-19 has disrupted our sleep

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

This project in India helps people and tigers co-exist peacefully

CHINA UNLIMITED. PEOPLE UNLIMITED. RESTRICTIONS LIMITED

The number of internally displaced people is at a record high. Here’s why

An economist explains how to create a fairer society

The West and Russia accomplished the dismembering and the economic destruction of Ukraine

UN calls for funds to ease ‘deteriorating’ humanitarian situation in Gaza and West Bank

Why nature is the most important stakeholder of the coming decade

Transport Committee pledges to stop empty flights due to COVID-19

Global Report on Food Crises reveals scope of food crises as COVID-19 poses new risks to vulnerable countries

UN health agency identifies 5-year-old Congolese boy as first confirmed case of Ebola in Uganda

UN genocide adviser welcomes historic conviction of former Khmer Rouge leaders

EU approves close to €240 million to strengthen resilience in neighbouring countries hosting Syrian refugees in light of the coronavirus pandemic

EU members commit to build an integrated gas market and finally cut dependency on Russia

The creative technology and its advancements

Stronger partnerships with post-conflict countries needed to ensure ‘path towards durable peace’: UN chief

ECB offers plenty and cheap liquidity to support growth in all Eurozone countries

3 steps to strengthen Europe’s competitiveness in the digital age

Women’s leadership ‘critical’ to future of Niger

How electrification will make the world more inclusive

The world needs a circular economy. Help us make it happen

The climate and COVID-19: a convergence of crises

How blockchain is addressing key problem patterns in the financial services sector

Erdogan’s electoral win on a ‘me or chaos’ dilemma means trouble for everybody

Encouraging progress made in 2018, in ‘zero tolerance’ effort to end sexual exploitation and abuse across UN

From battlefields to boardrooms: 3 steps to building high-morale teams

EU prolongs economic sanctions on Russia by six months

ECB tied in the anti-monetary German ideology

Africa-Europe Alliance: EU boosts pan-African Internet connectivity with €30 million

United States: UN chief ‘deeply saddened’ by deadly California wildfires

We now know how much ice Antarctica has lost in the last 25 years – three trillion tonnes

More Stings?

Advertising

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