Members of the European Parliament are making a formal request to the European Commission to propose new legislation to improve regulation of financial markets, in particular regarding hedge funds and private equity investors. They also want measures to deal with some of the causes of the credit crunch.
In a report drawn up by Danish MEP Poul Nyrup Rasmussen of the European Socialist bloc, the Parliament has asked for a wide ranging series of legislative measures on issues related to hedge funds and private equity in the areas of financial stability, capital requirements, the valuation of illiquid assets, company takeovers and 'asset stripping', conflicts on interest, transparency requirements, and securities lending.
The report was adopted with 562 votes in favour 86 against and 25 abstentions. A related report, drafted by Klaus-Heine Lehne of the European People's Party and European Democrats, focuses in particular on transparency issues affecting these sectors.
MEPs were due to debate issues surrounding the ongoing financial crisis and its impact on the European economy on Wednesday.
"The European Union has to learn lessons from this crisis in terms of
regulations of our financial markets," the head of the European People's
Party and European Democrats, Joseph Daul said. Fellow Christian Democrat, Alexander
Radwan added, "Europe has to play pioneering role in this issue."
"What we expect from the Commission is not only an assessment of the financial
market crisis but we have to look into new developments...so that we can avoid
such scenarios occurring in the future," Mr Radwan said, calling for better
coordination between European supervisors.
The leader of the Alliance of Liberals and Democrats (ALDE) group, Graham Watson
agreed: "We need better regulation of financial markets. We should have
never allowed banks to lend up to 30 times their assets."
"But the baby should not be thrown out with the bath water," Mr Watson
added. "We need to improve regulation of the markets without putting them
in a straitjacket."
However, the head of the Socialist group Martin Schulz said that the market needs "more rules" and called for greater transparency, better evaluation of the ratings agencies and more state intervention.
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