THE financial industry's lobbying about US mortgage rules may have contributed to the recent financial crisis and may pose a threat to the industry's stability, according to a report published by three International Monetary Fund economists.
The economists found that institutions that lobbied the most also had more lax lending standards, tended to securitise more of their mortgages and had faster-growing loan portfolios.
The delinquency rates were also higher in areas in which these companies' lending grew fastest, the report showed.
"Our analysis suggests that the political influence of the financial industry can be a source of systemic risk," Deniz Igan, Prachi Mishra, and Thierry Tressel said in the conclusion of their report.
"It provides some support to the view that the prevention of future crises might require weakening political influence of the financial industry or closer monitoring of lobbying activities."
Regulators worldwide are pressing companies to improve risk oversight after the world's biggest banks and brokerages reported more than $US1.7 trillion in write-downs and credit losses since 2007 tied to the global financial crisis.
In the US, the Government has extended the $US700 billion financial rescue program until October.
The authors favoured a "moral hazard" interpretation of their findings, where financial companies lobby seeking looser lending standards because they expect to be bailed out during a crisis or because they favour short-term gains.
The report noted that 16 of the 20 lenders that spent the most on lobbying between 2000 and 2006 received funds under the US Emergency Economic Stabilisation Act.
Spending by finance and real estate industry companies accounted for about 15 per cent of overall lobbying in any election cycle, the report said.
Spending on lobbying was $US479,500 per company in 2006, compared with $US300,273 for defence companies and $US200,187 for construction companies, the authors said.
Source:smh.com.au/
Showing posts with label Lobbying over Brussels. Show all posts
Showing posts with label Lobbying over Brussels. Show all posts
Monday, January 4, 2010
Sunday, November 29, 2009
Lobbying over Brussels posts intensifies
José Manuel Barroso, the European Commission president, is to hold a final round of meetings on Friday morning with nominees for the next Commission before settling on a distribution of some 25 portfolios that could reshape responsibility for EU financial regulation.
Mr Barroso's deliberations, which have brought Brussels to a near standstill, could result in a decision as early as Friday, according to people familiar with the matter, although they warned that the process could drag on until the president returns from Monday's EU-China summit in Nanjing.
The contest for top jobs - particularly a handful of influential economic posts - has invited intense lobbying from the EU's 27 member states, in spite of Mr Barroso's insistence that the final decision will be his. The guessing game has been complicated by the fact that the president could decide to redraw specific portfolios.
The most intense speculation has settled on the fate of financial services regulation, which has traditionally rested within the internal market portfolio. France has mounted a strong campaign for the job, and it has become accepted wisdom among Brussels diplomats that its nominee, Michel Barnier, has the inside track. However, it remained unclear on Thursday whether Mr Barroso would opt to hive off financial services and banking into a separate portfolio, effectively depriving Mr Barnier of oversight of the City. The Commission has previously looked at creating a standalone department for financial services and financial stability, although those efforts were abandoned.
There were suggestions in Brussels that French diplomats were playing down the odds of the portfolio being kept intact but there was no confirmation of this view from Paris. Others argued that this might, in any event, simply be a ploy to damp expectations.
The financial services element of the portfolio will be highly active as the new Commission continues to push through legislation in the wake of the financial crisis and tries to overhaul Europe's system of financial supervision. The prospect of Paris directing such an exercise had set off alarms within the UK government. But officials in London appear to have been reassured by an understanding that Mr Barnier would probably appoint at least one British official to a prominent role.
The UK has emerged as the only certain piece in the puzzle so far after Lady Ashton, the trade commissioner, was selected by member states last week to serve as Europe's first foreign policy chief. There are also high expectations that Neelie Kroes, the current competition commissioner, will take a beefed-up telecoms portfolio after comments this week from the Dutch prime minister. As for the rest of the portfolios, they were fodder for a Brussels guessing game. "It's still anybody's guess," one business lobbyist said.
Source:ft.com
Mr Barroso's deliberations, which have brought Brussels to a near standstill, could result in a decision as early as Friday, according to people familiar with the matter, although they warned that the process could drag on until the president returns from Monday's EU-China summit in Nanjing.
The contest for top jobs - particularly a handful of influential economic posts - has invited intense lobbying from the EU's 27 member states, in spite of Mr Barroso's insistence that the final decision will be his. The guessing game has been complicated by the fact that the president could decide to redraw specific portfolios.
The most intense speculation has settled on the fate of financial services regulation, which has traditionally rested within the internal market portfolio. France has mounted a strong campaign for the job, and it has become accepted wisdom among Brussels diplomats that its nominee, Michel Barnier, has the inside track. However, it remained unclear on Thursday whether Mr Barroso would opt to hive off financial services and banking into a separate portfolio, effectively depriving Mr Barnier of oversight of the City. The Commission has previously looked at creating a standalone department for financial services and financial stability, although those efforts were abandoned.
There were suggestions in Brussels that French diplomats were playing down the odds of the portfolio being kept intact but there was no confirmation of this view from Paris. Others argued that this might, in any event, simply be a ploy to damp expectations.
The financial services element of the portfolio will be highly active as the new Commission continues to push through legislation in the wake of the financial crisis and tries to overhaul Europe's system of financial supervision. The prospect of Paris directing such an exercise had set off alarms within the UK government. But officials in London appear to have been reassured by an understanding that Mr Barnier would probably appoint at least one British official to a prominent role.
The UK has emerged as the only certain piece in the puzzle so far after Lady Ashton, the trade commissioner, was selected by member states last week to serve as Europe's first foreign policy chief. There are also high expectations that Neelie Kroes, the current competition commissioner, will take a beefed-up telecoms portfolio after comments this week from the Dutch prime minister. As for the rest of the portfolios, they were fodder for a Brussels guessing game. "It's still anybody's guess," one business lobbyist said.
Source:ft.com
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