On St George's day I raced back to London from Brussels to meet with Her Majesty’s Treasury and the Bank of England.
I find myself in the midst of long and extraordinarily complicated discussions over who calls what shots when a cross-border bank fails. This has become extremely topical and just-a-bit-heated since the failure of Cyprus' banks. A real lesson in the dangers and uncertainty created by regulators and politicians when they send out very mixed messages.
It is also quite an interesting case study of my day job!
I have been following this legislation for a while now. The failure of Lehman’s, RBS, HBoS and others sparked off thinking at a G20 global level on how regulators might be better able to deal with a bank collapse; by preparing in advance (living wills) and by being able to take a range of different possible actions. This work has been co-ordinated at the global level by the Bank of England’s Deputy Governor Paul Tucker. The EU “Recovery and Resolution Directive (RRD)” is Europe’s attempt to bring this into law.
Paul and his team are quite clear: given the importance of financial services in the UK, we need to be able to work transatlantically UK/US should there be another Lehman’s (God forbid) and in the future we need India and China too. But to keep the pressure on the global deals we need an EU template - preferably before the G20 meeting in the autumn. Which, when you take into account summer breaks and lead up times to such meetings, really means the BoE want it agreed now.
UKIP would tell you that this sort of thing is all set by unelected bureaucrats. Actually, to get agreement in Europe it needs to have the agreement of the European Council (i.e. by a vote of the 27 Finance ministers) and by a vote of the European Parliament.
In the Parliament five MEPs lead the negotiations. The Rapporteur and his “Shadows” from different political groups. For the past few months we have been working through the hundreds of amendments tabled by members, deciding which ones to re-word and which to bring to a vote of the Parliament’s committee. We had hoped to vote on Wednesday but on Monday night, after a 5 hour meeting, we had still not finished enough of the complex details and decided to delay. Once the committee has voted, the same five MEPs will then start the 3 way trialogue negotiations with the European Council and the European Commission to see if agreement can be reached. This is the sort of legislation that is massively criss-crossed with red lines - the detail really is devilish.
In my opinion far too much power is given to the Parliament. I very often I find myself in disagreement with the majority of MEPs. But I also know that, by being in the room, sometimes I manage to move the direction of pieces of text. On Monday night, for example, whilst I was battling on bank recoveries, my colleague Ashley Fox MEP was standing in for me and defending key UK interests of mortgage regulation. If the British Conservatives had not been in the room on those negotiations for the past year we would have ended up with an EU ban on Buy-to-Let mortgages, many first time buyer mortgages and shared equity loans.
Yes, the EU legislates far too much, yes much of what the EU does should be left to national legislation - but as long as we are in the EU it is vital that UK MEPs turn up for meetings. And if one day the UK leaves the EU then we will still need to find a way to make sure that UK interests are protected.