PES

The launch of my blog finds me facing an all-too familiar prospect; the failure of the European Commission to respond to the economic crisis.

You may already know the story, but here it is if you don’t: in September last year the European Parliament passed my report calling for new regulation for all financial players, including private equity and hedge funds. We have to get financial markets under control if we are to prevent future financial crises. Don’t get me wrong, financial markets have an important role to play in the economy. But they have to serve the needs of real people and businesses. And private equity and hedge funds have a tendency to do the opposite if left to their own devices: their only goal is short-term profits. They are too often a menace to healthy companies and to workers rights, they threaten financial stability and pay very little tax. In fact one fund manager admitted he paid less tax than his cleaning lady! Take the case of the British ‘Automobile Association, which was bought by private equity in 2004. It was providing an expanding service and employed 10,000 workers. Since the takeover some 6,000 were laid off and both prices and waiting times for customers have increased. The executives themselves pocketed millions in bonuses.

That’s why we need these new controls. And that’s why we need the European Commission to come forward with the regulation demanded by the Parliament.

But in the Commission, President Barroso and Commissioner McCreevy, whose job it is to implement the rules requested, have delayed their response again and again. They have promised action but they are not delivering. Whilst Mr Barroso was writing to me assuring me that he had a ‘firm commitment’ to appropriate regulation, Mr McCreevy was off telling ‘venture capital’ groups that he believed in self-regulation for the industry. Well last week I finally saw their proposal. When I read it I was dismayed. It has more holes than a Swiss cheese. It completely fails to outline any sort of effective or binding regulation and as such completely contradicts the Parliament report and the agreement made by the G20 leaders in London earlier this month.

The Commission’s attitude to financial regulation is a scandal and I am tired of it: once the Parliament has approved a report, it should not take petitions and letters to get the Commission to respond. It shows a lack of respect for the MEPs and the citizens they represent. That’s why I have joined with my colleagues Martin Schulz and Pervenche Berès to write to Mr Barroso and express our displeasure. You can read the letter, which points out the flaws in the proposal, here. We want answers, and they better be good. I’ll let you know when we have a reply.

The problem is that the European Commission does not know how to respond to the crisis, and is not doing enough. At the G20, conservative European leaders refused to support Gordon Brown and Barack Obama’s proposal for increased global investment in new jobs and growth. They say they want new financial market regulation, they even promise it, but Commission President Barroso and Commissioner MCCreevy are not delivering. But you can be sure of one thing: the PES is watching and demanding and pushing for an effective European response to the crisis.    
   
I will post again later this week – the election is getting nearer and nearer and with the PES campaign launch in Toulouse on Friday, there’s plenty to talk about.