US Must Enforce Post-Crisis Banking Regulations, Says EU Commissioner Nominee
Despite apprehensions that a forthcoming Trump administration could dismantle regulatory safeguards, Maria Luís Albuquerque, Portugal’s nominee for the position of EU Financial Services Commissioner, emphasized the necessity for the United States to adopt post-crisis banking regulations. During a European Parliament hearing on Wednesday, the former finance minister addressed these concerns while seeking approval from lawmakers for her new role.
Albuquerque dismissed worries surrounding potential conflicts of interest stemming from her private sector career, asserting her commitment to maintaining financial stability. She appeared to contradict a suggestion by Mario Draghi, which aimed to enhance competitiveness through increased investments from insurance firms. “I would urge our international partners to also implement the proper framework,” Albuquerque stated, adding, “I am very much aware of the need to preserve financial stability; I would not support a race to the bottom.”
During the hearing, MEP Jonás Fernández (Spain/Socialists & Democrats), who serves as the economic spokesperson for the Parliament’s second-largest faction, inquired about safeguarding Europe from the adverse effects of potential changes to US banking regulations, particularly in light of former President Donald Trump’s recent re-election for a second term.
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Trump and the Global Bargain
The EU has faced challenges in advancing measures designed to strengthen banks against market volatility, known as the fundamental review of the trading book. This delay stems from similar regulatory rollbacks in the US, which have created a scenario where competing banks might operate under drastically different regulatory frameworks. There are growing concerns that essential financial protections may be unwound, especially if Trump fails to uphold international standards established by the Basel Committee on Banking Supervision, which were designed to avert a recurrence of the 2008 financial crisis.
Fernández criticized Albuquerque for allegedly transitioning “straight through a revolving door” after leaving government to work for Arrow Global, a firm specializing in acquiring distressed loans from banks. In her defense, Albuquerque stated that this issue had been thoroughly reviewed when she served as a Portuguese lawmaker. “The ethics committee of the Portuguese Parliament assessed this matter and concluded that there was no conflict of interest or incompatibility… that issue was properly addressed where it should have been,” she asserted. She further elaborated, “The role of an independent, non-executive director closely resembles that of a regulator, as opposed to being an executive within the same company.” This statement referred to her prior positions at various private sector organizations, including Morgan Stanley, where she worked until August.
Throughout her extensive three-hour hearing, Albuquerque proposed few new initiatives, instead expressing her intent to focus on the effective implementation of existing laws. This perspective aligns with feedback from businesses that claim an influx of legislation is impeding growth.
Competitiveness Boost
In a climate characterized by numerous Brussels regulations concerning issues such as sustainable finance and financial technology, Albuquerque’s approach is likely to resonate positively within the financial sector. However, she also appeared to rebuff suggestions for reducing current obligations to stimulate the economy. In a recent pivotal report on European competitiveness, Draghi, who previously served as the European Central Bank chief and Italy’s Prime Minister, advocated for lowering capital requirements for insurers and pension funds to facilitate investments in innovative companies.
“We have just reviewed Solvency II,” Albuquerque remarked, referring to a significant reform in insurance legislation that was finalized by finance ministers on Tuesday. This comment was made in response to probing questions from MEP Markus Ferber, a German MEP serving as the economic coordinator for the Parliament’s center-right European People’s Party. “There remains a considerable amount of work to be done to ensure this agreement is implementable on the ground, so I would suggest allowing some time to see if it is effective,” she added.
Hearings for the 26 candidates vying to become European Commissioners will continue until November 12. MEPs have already expressed concerns over the selection of Swedish conservative Jessika Roswall to lead the European Green Deal. Should the Parliament approve her nomination, Albuquerque could succeed Ireland’s Mairead McGuinness as the EU’s leading financial services official within weeks.
