Parliament adopts Rasmussen report calling for new regulation of financial markets
23 September 2008
The European Parliament today passed the Rasmussen report on new and better regulation of financial markets - calling on the European Commission to make legislative proposals by the end of the year covering “all relevant actors and financial market participants, including hedge funds and private equity”.
The proposals include:
• Mandatory capital requirements for all financial institutions;
• Aligning reward packages with longer term outcomes, to reflect losses as well as profits;
• Full transparency of high level executives and senior managers’ renumeration systems;
• Disclosure of leverage/debt exposure, source and amount of funds raised, and identification of shareholders (above a certain level) for all investment products (and therefore including hedge funds and private equity) to investors and public authorities;
• Extending the Directive obliging employees to be informed and consulted during takeovers to include leveraged buy-outs;
• Measures to “avoid unreasonable asset stripping in target companies”;
• Action to avoid excessive debt caused by leveraged buy-outs, so that “the level of leverage is sustainable both for the private equity fund/firm and for the target company”;
• Employees or staff representatives of pension funds be informed on how their pensions are invested and the associated risks.
The European Commission is obliged to respond to the report, and has always come forward with proposals in the past when requested in this way by the Parliament.
“We need new and better regulation, and we need it now” said PES President Poul Nyrup Rasmussen. “The proposals agreed today by the European Parliament would be a first step towards making future crises less likely."
"It is the first time that the European Parliament has ever demanded regulation of private equity and hedge funds."
"Commissioner Charlie McCreevy has got to respond, and respond positively. With millions of families worried about their savings and pensions it would be very unwise to remind us that until very recently he believed that self-regulation was best. The financial crisis has forced the conservatives in the European Parliament to accept sensible reform, now it is the turn of the European Commission to prove that they no longer believe that the market alone knows best.”
Today Poul Nyrup Rasmussen was presented by a petition signed by over 100,000 people calling on European, US and world leaders to strengthen financial market rules. Organized by the global internet movement Avaaz the petition states "We urge you to take a lead in fixing the fundamental flaws and loopholes which made the global financial crisis possible, including basic problems of debt and risk, incentives and transparency. We need you to work together to protect the public good by framing stronger rules for all parts of the global financial system. Be bold, and we will support you."
The Party of European Socialists has been working on financial market reform for over 18 months. For more information click here
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