It’s amazing how short memories are. The way some people talk, the financial crisis happened under Queen Victoria not Elizabeth. Yet it is less than ten years since the actions of a group of irresponsible, under-regulated bankers brought the world economy to its knees.
We all know that we could not cope with another crisis like that of 2008. It crippled our economy and left a generation of young people out of work. That’s why the EU has been leading the way in bringing in new laws to revolutionise our financial sector, making it safer and work better for citizens and consumers. ‘Dark pools’ of trading are now open to regulators. Risky behaviour by bankers is discouraged not rewarded. Those are major changes, and the EU doesn’t get nearly enough credit for it.
In the same way they want a bonfire of workers’ rights, many Brexiteers hope a British exit from the EU will ‘free us’ from these new financial regulations. The regulations themselves are barely heard of outside specialist circles. The plethora of new measures put in place since 2008 may as well be written in Klingon as far as most of us are concerned: MiFID/MiFIR, CARRP, CSDR, MAD/MAR, EMIR, BSR, BRRD and AIFMD, to name a few. But their impact has already been massive, turning our financial sector around so it funds the real economy rather than enables speculation to line the pockets of the super-rich.
It is the EU, for example, that introduced new rules to make sure all banks in Europe are far less likely to fail but, if things go badly wrong, they fail in a way that protects ordinary people rather than just rich bankers. Your savings, up to a total of £75,000, are completely protected thanks to the EU, while bankers’ bonuses are capped. George Osborne sued the EU over this, demanding the right for bankers to be paid as much as they like. Unsurprisingly, he lost.
But it wasn’t just banks that caused and sustained the financial crisis; it was their position in a complex web of investment firms, asset managers, hedge funds, private equity investors, stock exchanges and a whole range of other people and institutions. Much of my work in the European Parliament has been focused on new regulations to ensure that these other parts of our financial system are equally safe and function properly.
The Socialists and Democrats (Labour’s political group in Europe) have been successful in setting new rules to prevent insider trading, market manipulation and irresponsible trading in so-called “commodity derivatives”, and to ensure ordinary investors aren’t ripped off. The wheelers and dealers haven’t liked it, and I’m often lobbied to get these new regulations watered down. But by working together with other socialists and NGOs, we’ve been able to maintain these stringent and safe new standards.
As a result, the whole European financial system is significantly safer than it was before- something that could only be achieved by working across countries. Just as collective bargaining in the workplace makes individual workers stronger, so a 28 country collective approach means we can stand up to the vested interests in the global financial sector.
I can just imagine the champagne corks popping if we vote to leave on the 23rd June, as the worst kind of financial speculators look forward to another bonanza. Let’s vote in the interests of working people and the unemployed instead, and keep our financial system safe!
This blog was originally featured on Touchstone on 12/05/2016