Banksters at it again

“The European Commission has concerns that … three banks may have taken part in a collusive scheme which aimed at distorting the normal course of pricing components for euro interest rate derivatives,” the body said in a statement issued May 22. The three banks in question are JPMorgan Chase, HSBC and Crédit Agricole. Another four banks (Barclays, Deutsche Bank, Royal Bank of Scotland and Société Générale), also accused of misconduct concerning the Euribor, reached a settlement with European regulators.

“The European Union is indeed a community of states, but at the end of the day, the member states compete against each other instead of cooperating to put forward a comprehensive set of rules for financial markets,” says Joost Mulder of Finance Watch, an independent association set up in 2011 to act as a public interest counterweight to the powerful financial lobby. “What the individual states want is to protect their countries’ banks and investment funds,” Mulder added.

Opposition to far-reaching financial regulation comes from practically every state, but in changing roles. Britain usually opposes rules that would affect operations at the London financial market. It also has consistently opposed establishing limits for bonuses for financial managers, one of the main reasons for risky investments and moral hazard. Germany and France prefer to pass modest laws on financial aspects, to avoid approving a tougher European binding regulation.

The list of actions taken by European governments to spare banks and investment funds from new rules is long. In December last year, the French government managed to arrange for French banks to pay a lower-than European average contribution to the E.U.-created national deposit insurance.

“To obtain that, France used the friendly support of Michel Barnier, the French European Commissioner for Internal Market and Services,” says Burkhard Balz, German member of the European Parliament.  Balz is a member of the conservative Christian Democratic Union.

“Over the last six years we have seen a pattern of behaviour concerning efforts to introduce a Europe-wide financial regulation,” Udo Bullmann, a German Social Democratic member of the European Parliament, told IPS. This pattern goes as follows, Bullmann added: “First, the European Commission makes a timid regulating proposal. The European Parliament takes the proposal over and toughens its content. But then it is the turn of governments, and they water the proposal down, even under the original commission level.”

The reformists' hope, the Tobin Tax or Robin Hood Tax, has been squashed. Sven Giegold, German Green Party member of the Euro-Parliament and expert on international finance, even goes as far as saying that “France, nominally a strong supporter of the Tobin tax, actually did kill it.”

In May, during negotiations at the European Council, the French government opposed raising the Tobin tax on most financial derivatives and on government bonds. Giegold said that “France obviously fears that if taxed, banks wouldn’t buy government bonds.”

After such objections, Giegold complained, “the original tax on financial transactions has been devaluated to a useless levy to be paid only by small savers.”

A new scheme to avoid new rules for financial markets in Europe is to make them part of supra-regional binding projects, such as the Transatlantic Trade and Investment Partnership (TTIP), currently under negotiation between the European Union and the U.S. government. According to Finance Watch, TTIP negotiations will encourage convergence around the lowest common standards, not the highest,” which will lead to a  "‘race to the bottom’ in financial services regulation.”