As the European Commission today presented an ambitious action plan on creating the much-anticipated Capital Markets Union, Molly Scott Cato MEP, a member of the Parliament’s Economic and Monetary Affairs Committee, raised concerns about the revitalisation of ‘securitisation’ as part of the package of measures. Dr Scott Cato commented:
“Just the suggestion of securitisation as a solution to our banking problems sets alarm bells ringing for those who are not yet ready to forgive and forget the financial crisis of 2008. Securitisation was central to the irresponsible and high-risk trading that led to the financial crisis and is typical of the mystification and misleading language used in finance markets. Rather than offering security it has historically been used as a technique for concealing risk.”
Greens are also concerned to ensure that the smaller players are not crushed by unnecessary bureaucracy. Molly Scott Cato said:
“We are pleased to see that our call to have credit unions and community banks excluded from some of the more weighty regulation has been heard. It would be a tragedy if these financial institutions that work for the common good were damaged by the regulatory response to a crisis that was not of their making. Small and sustainable credit institutions need to be exempt from complex financial rules and instead subject to strict but non-bureaucratic rules. We welcome that this is being considered but unfortunately there is no firm commitment.”
The Commission’s Capital Market Union package aims to increase investment in the European market by providing new sources of funding for business and to build a single market for capital. President Juncker has set out the CMU as one of his key priorities.