Bargain basement financial regulation from the US will not stop European Financial Stability – Hayes
Speaking today in Brussels at a Euractiv Conference to analysis the direction of financial regulation in the US following Donald Trump’s election, Brian Hayes MEP reiterated that Europe must continue to safeguard EU financial regulation put in place since the financial crisis.
He said: “The reality of 2009 cannot be forgotten in Europe or in the US. Millions of people lost their jobs. Banks across the world collapsed. A financial tsunami, not seen since the Great Depression caused mayhem for ordinary people. This was brought about by light touch regulation and supervisory incompetence. We are not going back to that.
“And while everyone recognises the need for a review of what’s working and how regulation might be improvised to enhance growth and investment, that does not mean that the building blocks need to be knocked down. More importantly, if EU banks are placed in a disadvantaged position because of a US Financial regulatory kick-back, that poses new risks to a financial system that is still only recovering.
“The EU-wide financial legislation put in place since 2009 has made a difference in making sure that EU banks are well capitalised, properly supervised and have now a resolution mechanism to deal with banking collapse. From CRR, CRD IV, Solvency II to banking union much has been achieved. And much more needs to happen especially in the Capital Markets Union space to deliver on new investment in Europe.
“Equally, the Dodd Frank legislation in the US has stabilised the US banking sector. We should never forget that it was the US sub-prime property market debacle that caused the initial phase of the crisis.
“If the new Trump administration wants to radically alter existing financial regulation in the US it would set a poor international standard and make it more difficult to agree international best practice when it comes to financial services. The possibility that Dodd Frank might be significantly altered could itself provoke a new threat to the international financial system.
“Europe must constantly engage with this new administration and with the Congress and Senate. The President, as we saw yesterday in the postponement of a vote on a replacement Bill to Obama Care, does not govern alone. We in the EU need to make the case for international action from a financial stability perspective, to work with the US in setting international standards and in limiting risk and contagion.”