Brussels’ MEPs ready to duke it out with bankers

February 4, 2010

Every new year brings resolutions, and the European Parliament is no exception.

Often derided as a multi-lingual talking shop, the institution is feeling newly invigorated by some fresh faces and by the European Union’s Lisbon reform treaty, which came into force late last year and gives the 736-member parliament more say in drafting laws and acting as a check on legislation.

Almost immediately, parliamentarians were letting their voice be heard, forcing Bulgaria to withdraw its nominee for the European Commission last month because she wasn’t seen to be up to the job. They also look ready to block an agreement between the EU and the United States on sharing data on bank transfers, and are really beginning to show their teeth when it comes to financial sector reform.

It’s one aspect of the latter move — reported exclusively by Reuters on Monday — which is set to cast MEPs in the role of banker-bashers-in-chief and could put them on a collision course with national governments.

 Some senior MEPs are threatening to spoil a plan to set up new EU banking watchdogs because they believe the watchdogs’ power has been watered down even before they’ve been set up by a deal struck among some finance ministers.

The watchdogs are supposed to keep tabs on the banking sector and the risks bankers take. But last December British chancellor Alistair Darling, worried about losing influence over the regulation of London, Europe’s largest and richest financial centre, agreed a veto with other some other finance ministers.

The veto said that if the watchdogs issued a ruling that could have “fiscal consequences” for a country — in other words, could end up costing taxpayers, and in Darling’s case British taxpayers, money — the ruling could be stayed.

Frustrated by what they see as a Monopoly-style “get out of jail free” card, senior MEPs are preparing to take on London and Berlin, who insiders say also backed the veto.

British Conservative MEP Syed Kamall, who wants to protect London’s interests as a financial headquarters, sees danger ahead for Britain’s capital if the MEPs get their way, writing in a recent statement that Darling had been “rolled over as Euro MPs grab power”.

There is still a long way to go before legislation overseeing the watchdogs is complete — amendments will go back to parliament within a few weeks, and then national governments will get to have their say again, so the veto is far from being removed yet.

 But even at this relatively early stage of the process, it’s clear the European Parliament, and some MEPs in particular, aren’t going to let bankers and their backers escape jail free on this occasion.

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