Publicado por Exchange News Direct/EXNEWS (24/02/2010)

More Powerful EU Financial Supervisory Bodies And Less National Interest, Demand MEPs

The need for more ambition and more Europe was the main message to emerge from debates on the EU financial supervisory package at Parliament's Economic Affairs Committee on Tuesday. Calls for tougher legislation and a bigger transfer of powers to the EU supervisory level were among the chief demands made by the four MEPs presenting their draft reports.

All four EP rapporteurs questioned the Council compromise that emerged from December's Ecofin meeting. The safeguard clause protecting Member States' fiscal powers, which the rapporteurs consider over-restrictive, was the major bone of contention. Another concern was the possibility of geographical fragmentation, as the Commission is currently proposing different cities for each authority.

One supervisory system in one city

The watchdog system being proposed by the Commission is made up of three separate micro-supervisory bodies for the monitoring of banking, insurance and market institutions respectively and another macro-supervisory body for the monitoring of systemic risk. Although willing to preserve these four bodies, the rapporteurs suggest grouping them together under the European System of Financial Supervision proposed in the de Larosière report on financial supervision in the EU. Consequently they also argue - unlike the initial proposal - that a common location should be chosen, with the European Systemic Risk Board report proposing that this be Frankfurt. This would not only reduce operating costs but could also be very useful in the event of a crisis necessitating emergency action.

Safeguard or wildcard?

As it currently stands the safeguard clause found in the proposed texts establishing the three micro-supervisory authorities offers a quasi-veto for Member States regarding the decisions of these authorities.
The rapporteurs therefore propose that the opportunity to invoke such a safeguard be limited and that the Member State concerned be required to provide an impact assessment detailing the extent to which the decision impinges on its fiscal sovereignty.

Stronger micro-supervisory authorities

Apart from the very important question of the safeguard clause, the three rapporteurs for the micro-supervisory authorities proposed a number of other improvements to the Commission's proposals, mostly to increase the role of supervision at EU level.
The reports propose that these authorities also be tasked with preventing regulatory arbitrage and that they should have a power of initiative to undertake stress tests. They should also represent the EU during international dialogues of supervisors. To varying degrees the rapporteurs would confer mediating powers on the authorities with regard to conflicts between national supervisors, with the report on the banking authority going furthest by suggesting a binding mediating role.

All reports give a more important role to the European Parliament, particularly by entrusting it with the task of overseeing the activities of the authorities.
Specifically for the banking authority, the rapporteur proposes that the authority takes over from national supervisors the direct supervision of cross-border 'too big to fail' financial institutions and puts forward the idea of setting up a European guarantee fund which could be used to bail out banks in difficulty.

As for the markets authority, the draft report proposes that the authority be granted the right to prohibit the trading of certain products to protect investors and ensure stability.

European Systemic Risk Board

The rapporteur proposed a host of amendments which review the governance bodies of the ESRB, including their composition and most importantly a proposal is made for the president of the ECB to also be the president of the ESRB. The role of the EP is also increased by proposing that Parliament can conduct hearings of the ESRB's president and other members of the steering committee.
The report empowers the ESRB to issue a warning declaring the possibility of an emergency if it detects a risk which may destabilise the financial markets or the financial system in the European Union. It can also declare the existence of an emergency. When it issues these warnings it will transmit them through the Parliament and not only through the Council.

Finally it is proposed that the ESRB should be able to request information from undertakings not covered by the banking, markets or insurance supervisory systems.
Other reports discussed as part of the financial supervisory package were those dealing with the role of the ECB in the work of the ESRB, and a report dealing with the specific powers of the European micro-supervisory authorities. All reports are expected to be put to the vote in committee in May, with a plenary vote to follow in July.

Tuesday 23 February 23.02.2010

In the chair: Sharon Bowles (ALDE, UK)

Rapporteurs:

European Banking Authority
José Manuel García-Margallo Y Marfil (PPE, ES)

European Securities and Markets Authority
Sven Giegold (Verts/ALE, DE)

European Insurance and Occupational Pensions Authority
Peter Skinner (S&D, UK)

European Systemic Risk Board
Sylvie Goulard (ALDE, FR)

Specific tasks for the ECB in ESRB
Ramon Tremosa I Balcells (ALDE, ES)

Powers of the Micro-Authorities
Antolín Sánchez Presedo (S&D, ES)