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the eu, consultation and the crisis August 10, 2009

Posted by Bradley in : consultation , trackback

Measures which are designed to respond to the financial crisis have been proposed in ways that short-circuit normal processes. The EU’s consultation on proposals to amend capital requirements, for example, has a consultation period of less than eight weeks because:

These amendments form part of the ongoing response of the European Union to the financial crisis and a proposal is scheduled for adoption by the Commission in October. A shorter consultation period is necessary to meet that timetable.

But the political process sometimes slows down the adoption of measures prompted by crisis. A Credit Ratings Regulation, for example, was proposed in November last year but it has not yet been adopted. The consultation for that measure, which began in July 2008 was also truncated:

It was not possible for Commission services to start the consultation period earlier given the fact that the advice of the Committee of European Securities Regulators (CESR) and the report of European Securities Markets Expert group (ESME) were delivered only in May and June this year respectively. These contributions had been prepared on the request of the Commission and offered the necessary basis for the Commission services’ work in this area. Moreover, a substantial amount of time in the preparatory phase has been devoted to eventually unsuccessful attempts to create a self-regulatory solution for the CRA industry.
Neither is it possible to extend the consultation period later in September: in view of the forthcoming elections, the European Parliament has agreed with the European Commission to accept the Commission proposals to be dealt in co-decision only by October 2008 at the latest. This implies that the Commission services will need to launch and finalise an Interservice Consultation in September 2008 in order to meet this deadline. Commission services will compensate the short consultation period by individually encouraging important stakeholders (including regulators, Member States and the CRAs) to participate in the public consultation.

It would be nice to think that the later delays redress some of the defects of the initial consultation, but I’m not so sanguine. Commentators suggest that the Commission may be trying to influence the Basel capital review process by moving quickly.


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