The European Union is getting ready to promote a tool that caused the global financial crisis, Corporate Europe Observatory (CEO) warns in an opinion preceding the Parliament's plenary session vote on the new rules for securitisation operations and prudential requirements for banks, in Strasbourg on Thursday 26 October.
The future regulation sets out criteria for 'simple, transparent and standardised' (STS) securitised products, with preferential capital treatment and a new risk calculation methodology hierarchy for these products (see EUROPE 11827).
“Corporate lobbyists have tried to wash securitisation clean of its terrible track record and its reputation as 'public enemy no. 1', but it remains a very dangerous tool that needs to be strictly regulated”, says Kenneth Haar, CEO's financial policy researcher, criticising the influence of the automotive and financial industries, which have further relaxed the rules.
According to an official document of which the organisation has had sight, five out of eight of the automotive industry's requests are reported to have been agreed to, such as creating an exemption to the requirements for short-term securities ('asset-backed commercial papers').
The organisation hopes that there will be a last-minute negative vote on the legislative package at the European Parliament. “If not, citizens may have to pay for their lack of caution in the years to come”, it regrets. (Original version in French by Marion Fontana)