UK urged to lead US-style financial reform in Europe

The US Senate is expected to approve a landmark bill on Wall Street reform later today, covering bank bonuses, financial transparency of complex derivatives, regulation of hedge funds and food markets. This legislation will send shockwaves across the global financial sector, but WDM fears that proposals for a similar EU crack down of the banks may not be backed the UK government.

US legislators have been under enormous public pressure to regulate secretive and complex derivative trading, which is blamed for triggering the global economic crisis.

France and other European nations are strongly supportive of similar proposals at the EU level, but we are concerned that the UK government could seek to block such reforms and are launching a new campaign next week to push the government to take the lead in pushing for financial reform in Europe. We point to the City of London’s track record of lobbying against EU efforts to force the so-called ‘shadow banking’ system out into the open, and are launching a campaign to get the government to crack down on excessive speculation by the banks.

Deborah Doane, director of the World Development Movement said:

“While the US is passing legislation in this area, the EU is well behind the curve. Because of its prominent role in financial markets, the UK needs to take the bull by the horns and lead by example, both at home, and through proposals in Europe. Ignoring a problem doesn't make it go away. The UK government has been oblivious to the negative impacts of speculation on commodity derivatives, in spite of overwhelming evidence that it has caused inflation here in Britain and hunger in poor countries.

“Nobody benefits from this kind of reckless gambling except a few City wheeler dealers. British consumers suffer because it drives inflation, British companies suffer because of volatile oil and raw material prices, and the world's poorest people suffer because basic foods become unaffordable. The City of London is one of the world's largest financial centres, and the government must make sure our regulators are serious about cracking down on dangerous speculation."