Britannia Radio

This is a monstrous assumption of powers that the EU does not 
possess.  Any British government in its right mind [when, if ever, we 
get one] would veto it outright

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Just seen that Open Europe comments:- "Giving binding mediation 
powers to European supervisory authorities, effectively granting them 
the right to over-ride decisions made by national supervisory bodies, 
would mark a significant transfer of powers to the EU level.  Whether 
in favour or against the proposal, such a shift requires a treaty 
change - not only a decision in the Council of Ministers. The UK 
Government is therefore right to question the legality of the 
proposal. [my emphasis]

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FINANCIAL TIMES 20.5.09 n UK
European plan for financial regulation faces UK obstacles
By Nikki Tait in Brussels

Proposals for a radical overhaul of financial supervision in Europe, 
due to be published next week, are likely to put Brussels on a 
collision course with the UK.

A draft of the European Commission's working document on financial 
supervision, obtained by the Financial Times, suggests that EU 
officials are determined to push ahead with the two-tiered approach 
suggested this year by Jacques de Larosiere, the former French 
central banker, as they try to guard against future financial crises.

In particular, the draft recommends the creation of a European 
Systemic Risk Council, to assess and warn of threats to financial 
stability in the region.

A "European system of financial supervisors" is also to be set up to 
oversee individual banks and financial institutions. Linked to this, 
there are plans to upgrade three existing pan-EU coordinating 
committees to become European supervisory authorities for the 
banking, insurance and securities sectors respectively, with 
recommendations that the "strengthened framework" be up and running 
in 2010.

The three new bodies would be asked to develop harmonised rules and 
common approaches to supervision and to settle potential disputes 
between national supervisors, who would continue to handle day-to-day 
matters.

The organisations could also be given responsibility for supervising 
"certain entities with pan-European reach [such as] credit rating 
agencies and EU central counterparty clearing houses", the draft says.

However, it is understood that these proposals are likely to 
encounter fierce resistance from the UK authorities. Sources familiar 
with the UK position said that one main objection would probably 
centre on the legality of giving binding mediation powers to European 
supervisory authorities, so that they could ultimately determine the 
outcome of a dispute between national supervisors.

The other fundamental concern is likely to centre on the splitting of 
supervisory responsibility from fiscal responsibility - and allowing 
the new pan-EU bodies to supervise entities which, in a crisis, might 
need bail-out funds from national governments.

A UK government spokesperson said last night: "We will consider [the 
report] carefully when the document is published.  It's a starting-
point for discussion."

Proposals for the European Systemic Risk Council look less 
contentious. In the draft, the Commission backs Mr de Larosiere's 
suggestion that the ESRC be chaired by the president of the European 
Central Bank but adds: "The ESRC chairperson could, alternatively, be 
any central bank governor elected by the membership.

"If the chairperson comes from a central bank within the euro system, 
it would seem appropriate that a vice-chairperson should be elected 
from among those member states outside the euro area, and vice versa."

The draft also stresses that the ESRC would not have any legally 
binding powers but would report regularly to member states and the 
European parliament

The Commission's working document is due to published on May 27. It 
might then be discussed by EU finance ministers as early as June and, 
possibly, reviewed by EU leaders when they meet at a summit later 
that month.

Depending on the political progress made during the summer, the 
Commission could then draw up more detailed legislation by the autumn.