Is the Commission gearing up for a fight? A recent reshuffle of the powerful DG Internal Market seems to suggest that fears voiced by Mervyn King in early May that regulators had to toughen up in the face of industry lobbying may have been heard. DG Internal Market has always been a Franco-Anglo split between the interventionist Commissioner Barnier and more practical DG Jonathan Faull. However two recent changes are causing speculation that Barnier is reinforcing his hand. Nina Calvino who is thought to be hostile to the industry has recently joined as Deputy Director General. Mario Nava, Head of Unit for financial market infrastructures has been stripped of his role over crisis management as he was thought to have been too soft on bondholder bail-ins. That part of his mandate now goes to Maria Valentza.
Upcoming work for the European Parliament’s Economic and Monetary Affairs Committee includes debating a Common Corporate Tax Base, an initiative which on the face of it seeks to reduce administrative burden for businesses, but is felt by some (namely Ireland), to be the first moves to a single rate of corporate tax.
MEPs will also vote on a non legislative Report from the Conservative MEP, Ashley Fox, into corporate governance in financial institutions. However, this didn’t stop MEPs from calling for a raft of new legislation from the Commission on this matter, including mandatory risk committees responsible for overseeing risk exposure, ‘fit and proper person’ tests for Boards including regular evaluation, separation of CEO and Chairman roles, and most controversially, for a gender diversity plan aimed at reaching 40% of female presence.
Next month should see a vote on Credit Rating Agencies, a non legislative issue, but an opportunity for MEPs to voice their calls for a more intrusive approach to supervising the “oligopolistic” and “unaccountable” agencies alongside calls for a study into the viability of a European Credit Rating Agency. We may also see a vote on short selling of CDS where MEPs are supporting the Commission in banning purchases of sovereign CDS for participants who do not own that sovereign debt. MEPs are also questioning why financial institutions can buy sovereign CDS on debt of their own Member State as these institutions are likely to go bust in the event of a default. In the Council, Member States have reached an agreement and will eventually have to negotiate a final version with the Parliament.