25 February, 2009

European leaders handling the economic downturn are relying on the advice of a committee dominated by financial industry insiders implicated in the current crisis, says a new report published today by SpinWatch, Corporate Europe Observatory, Friends of the Earth Europe and Lobby Control.

Would You Bank on Them? examines the track records of members of the EU’s High Level Group of financial “wise men”, who are charged with helping to frame Europe’s response to the meltdown in the financial sector. The group, named after its chairman Jacques de Larosière, will deliver its proposals for reform of the financial system to the Commission today.

Of the eight men, four have close links to giant finance corporations deeply implicated in the crisis such as Lehman Brothers, Goldman Sachs, BNP Paribas, and CitiGroup. A fifth, Callum McCarthy, was the head of the UK Financial Services Authority, accused of systematically failing during the crisis. Another is well-known for his opposition to regulation.

The Group is set to exert significant influence on the international response to the financial crisis. These proposals will be addressed by the European Council at its Spring Summit, just days before the crucial G20 summit on the financial crisis in London in April, attended by Barack Obama.

One of the report authors, Kenneth Haar from Corporate Europe Observatory said:  "Commissioner McCreevy has acknowledged that there has been too much 'regulatory capture' by the financial services sector. Yet, the de Larosière Group embodies this – it represents very narrow ideological views and economic interests.”

 The report argues that instead of repeating mistakes of the past, the Commission should break new ground, by investigating how financial industry lobbying contributed to the present crisis, and by employing entirely new consultation methods.

Author Andy Rowell from SpinWatch said: “The Commission must aim for an open and transparent process that ensures that policy recommendations are in the interests of all Europeans, not just the financial industry.”

You can download the report here.