UK Lords EU Committee Launches Inquiry into EU Proposals to Deal With the Financial Crisis

In the UK, the House of Lords European Union Committee has launched an inquiry into the European Commission’s proposals for dealing with the current financial crisis. The Committee held an evidence session on this issue with Lord Turner of Ecchinswell, chairman of the FSA and Lord Myners, financial service secretary to the Treasury in late November and are now inviting written evidence on the EU proposals.

The Committee will focus on four key issues raised by the European Commission’s proposals:

1. Commission legislation to implement a prudential European financial regime – Will this be effective in preventing a repeat of the current financial turmoil? Will new rules on credit ratings agencies and changes to the Capital Requirements Directive help or simply encourage financial institutions to relocate outside of the EU?
2. The future role of the European Supervisory System – Do we need a central European authority to supervise the activities of pan European financial institutions?
3. The effectiveness of European institutions in responding to the current financial crisis – did they act rapidly enough? Do these events signal the need for reform of European institutions?
4. The role of the EU in the global response to events – Is there a need for a global supervisory system? What role should the EU and existing financial institutions such as the IMF play in any new system?

Commenting, Baroness Cohen, chairman of the House of Lords EU Sub-Committee on Economic and Financial Affairs, said: “The current financial crisis has been a major test of the EU’s ability to react to worldwide economic events. Now, as the effects of the banking crisis and credit crunch begin to be felt in the wider economy, is the right time to assess what progress the EU is making.”

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