Blog Bot

Even as of today, The Daily Telegraph is asking why parliament is not being recalled to discuss the financial crisis.

Certainly, by contrast with Congress where, as my co-editor observes, we have seen democracy in action, naked in tooth and claw, the quiescence here of the political classes seems a little odd.

In truth, though, there is very little point in parliament reconvening. As is gradually emerging, there is very little it can do as the main levers of powers, with which to address the crisis – as Cameron hinted at – have passed to Brussels.

That much is an indication of how the wider debate is gradually turning. Although the MSM is still largely wedded to the idea that our government is still in charge, here and there we some recognition.

Over the weekend, we saw some comments on blogs, denying that there was any EU involvement in financial regulation. Now, we see grudging admissions, but with the proviso that the regulation is "a good thing" and, in any case, the UK is not only supportive but also a leading player in pushing for EU regulation – something which is largely true.

Soon enough, the reality might dawn on some commentator in the MSM, although so far, all the Telegraph can manage is a letter from a reader pointing out some of the EU involvement.

The reality is, of course, complicated. Financial services legislation is currently in transition between legacy rules and structures devised by member states, and new EU laws, imposed under a wide-ranging programme. Already, we have had the Financial Services Action Plan (FSAP) which was set for 1999-2005 (but has somewhat over-run).

The plans for 2005-2010 have already been set out in a White Paper and the latest state of play can be found in the 2007 European Financial Integration Report.

Although the EU has made no secret of its ambitions, it is nevertheless in no hurry. It fully appreciates the complexity of financial services and has not hitherto had the structures in place that could wholly supplant national systems of control and regulation.

Part of that stems from the lack of homogeneity within the EU itself, with its multiple institutions including the ECB, the EIB. the EU parliament, the Council and the commission. Even within the commission itself, responsibility is split, between Neelie Kroes's competition directorate and Charlie McCreevy's financial services directorate.

The EU has addressed that problem, in part, by setting up and Inter-institutional Monitoring Group (IIMG), which has a mandate to bring all the parties together and make sure they are all singing from the same hymn sheet.

In addition, behind the scenes, the EU has been setting up its own complex of regulatory and advisory structures, progressively to take some of the day-to-day load of the commission.

Leader of the pack is the Committee of European Banking Supervisors, of which few people are aware but it is an official EU body set up by a commission decision in November 2003 to "fulfil the functions of Level 3 Committee for the banking sector in the application of the 'Lamfalussy' Process."

As well as that body, there are also – as the commission helpful informs us - the Committee of European Insurance and Occupational Pensions Supervisors, the Committee of European Securities Regulators, European Insurance and Occupational Pensions Committee and European Banking Committee.

All of these bodies are part of the regulatory and advisory structure which helps "to ensure consistent implementation and enforcement of rules across the EU," and which will eventually form the core of the integrated European financial services regulatory apparatus.

At international level there are already the established bodies such as the Basel Committee on Banking Supervision, the World Bank, the International Monetary Fund and the OECD. What we are seeing there is that, increasingly, either directly or through the ECB, the EU is assuming the role of the lead player, representing the member states and thus taking over their negotiating roles on the basis of a pre-determined "common position".

Gradually, but inexorably, therefore, the EU is moving its troops into place ready for the final take-over, but even then it has no definite timetable for the final push. As we said, it is in no hurry.

Thus, in the current crisis, the EU is keeping its head down. While legacy regulations and systems still form a considerable part of member state capabilities, the commission is distancing itself from the crisis, declaring that the responses are down to the member state governments.

That is only true to a point but, by downplaying its own role, the EU – and especially the commission – can point to the chaos and uncertainties in the system – and argue for a more "coherent" EU approach.

This is precisely what it is doing with today's announcement, re-warming already existing plans in the hope of capitalising on what for the EU has become yet another "beneficial crisis".

However, benefit will only accrue if the public in general do not realise quite how much the agenda is already dictated by Brussels and how much a hand they have in current regulation.

EU financial services commissioner Charlie McCreevy (pictured), therefore, is playing that game, constantly emphasising that it is for member state governments to solve the crisis, then offering a package of already planned measures, given a "populist" spin to meet the mood of the moment.

He readily admits, though, that the proposals would not solve the current banking meltdown. They should strengthen market confidence and banks' resilience when they come into effect in two years' time, he says, illustrating the long-term view being taken by the commission.

He is, of course, supported by his boss, José Manuel Barroso who is glibly "stressing" that the European Union needed "to inject credibility in the European response." This is why, he said, "we are asking and urging member states for closer cooperation," putting in comfortable, neutral terms.

Meanwhile, David Cameron, who yesterday told us that "We need to understand how this [the financial crisis] happened, and how we're going to get out of the mess," then promising: "I will address those questions in my speech tomorrow," failed completely to do so in his speech today.

The "elephant", briefly paraded before the audience in Birmingtham yesterday, is very firmly back in its pen and nobody is saying nuffink. But that does not mean that the looming presence of the EU has evaporated. It is there for anyone with eyes to see and the will to look.

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