EU MEP calls for ‘European policeman’ to supervise financial industry

Those pressing for improved regulation of the banking sector will face "huge resistance," a senior MEP has warned.

Speaking in parliament on Thursday, French Socialist MEP Pervenche Berès, said she strongly advocates fundamental reform of the industry, including stronger banking and financial regulation.

But Berès, chair of the parliament’s influential economic and monetary affairs committee, said, "Everyday, I hear those in the industry and elsewhere who oppose intervention saying that stricter regulation will stop economic growth and that the cost will be too high.

"I am saying that we who advocate such action must mobilise ourselves and be very clear in our arguments. If we are not, the steamroller of ´you don’t understand anything - leave it to us` will win."

Berès was addressing a public hearing in parliament, organised by the Greens/EFA group, on the consequences of the current global financial crisis.

She questioned the ability of the European commission to act as a supervisor of the financial sector, saying the executive was handicapped by "a structural timidity."

Berès is a former head of the French delegation in parliament who has chaired the economic committee since 2004.

She said, "I support the action taken by the European Central Bank but what we really need is a `European policeman` to supervise the financial and banking industry and I am not sure that is the role of the ECB."

She told the half-day conference, "One of the real problems is that people in the industry were earning such huge amounts of money that they were taking huge risks.

"That is wrong and is very much part of the problem."

Another keynote speaker, Eric De Keuleneer, a professor at the Brussels Free University and managing director of Brussels-based CREDIBE, said, "Finance is like a drug, useful in the right amount, toxic if in excess.

"We have to stop the idolisation of finance, to stop believing that finance can create wealth.

"Risk management supervision by regulators should come back to fundamentals. They are too much based on ratings and rating agencies are now very sensitive to market prices of shares."

He said brokers should be subjected to "strict" codes of conduct, conflict of rules and disclosure rules, in any dealings with clients.

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