Brussels, 27/02/2008 (Agence Europe) - The members of the European Parliament committee on economic and monetary affairs held a first, somewhat heated exchange of views on the question of hedge funds and private equity funds. Poul Nyrup Rasmussen (PES, Denmark), responsible for drafting an own-initiative report, wished to place the debate at the macro-economic level, evoking the role of the financial markets in the financing of the real economy and in the context of the Lisbon Strategy. He will present a working document end March. MEPs of the EPP-ED Group warned against demonisation of the funds concerned and European regulation that would cause chasing them out of the EU. The EP could adopt the own-initiative report in July.
Mr Rasmussen called for competitive, transparent financial markets, responsible in the long term. Noting that the alternative investment fund industry is no longer a niche market (unlike ten years ago), he said that one could therefore no longer rule out all form of regulation. He stressed that it was unfair to call for the creation of a European market for this kind of fund, without there being rules. He called for conclusions to be drawn on the upheavals on the financial markets. In his view, a consensus within the EP is possible on condition that there is an innovative attitude so that a report “which makes the difference” is presented to the French EU Presidency during the second half of 2008.
Piia-Noora Kaupppi (EPP-ED, Finland) exclaimed that accusations were being made left, right and centre. She reproached Mr Rasmussen for his “populist” comments, which place hedge funds and private equity funds in the same basket. She said she was worried that the EP should call on the Commission to develop a legislative text that would hinder the development of the funds in question and cause relocation in off-shore territories. Joachim Kurt Lauk (EPP-ED, Germany) said the financial crisis has affected the regulated banking sector and not the unregulated sector which includes hedge funds. Supported by Wolf Klinz (ALDE, Austria), he warned against the ideological aberrations that may be a feature of the positions taken on this sensitive subject. Europe must not, he said, become a “fortress” closed to the development of the funds concerned. On the other hand, he said he was in favour of the creation of a list of funds that did not come under regulation. The largest financial industry using the leverage technique “the banking industry!” observed British Labour member Peter Skinner. “We shall kill the hen that lays the golden eggs if we regulate”, warned John Purvis 5EPP-ED, UK), the hen which provides the capital needed for financing the economy.
Ieke van den Burg (PES, NL) spoke of the study that the European Socialists and experts had presented in April last on the question of hedge funds and private equity funds (see EUROPE 9399). If you read the report, it is nonsensical to think that hedge funds and private equity funds are the same, Ms Kauppi replied. She went on to stress the importance of also taking into account competition and tax policies. Seeking to calm matters, French Socialist Pervenche Berès urged for a serene approach to the question. The work of the EP could thus be based on initiatives launched during the German Presidency during the first half of 2007 and keep in mind the financing of the real economy and stability of the financial markets. According to Udo Bullmann (¨PES, Germany), it will also be necessary to take into account in this debate persons affected by the financial crisis. Yes, in some ways, Mr Rasmussen concluded, it is possible to say that hedge funds have nothing to do with the crisis, but one cannot dismiss the risk of upheavals spreading to other sectors. (M.B.)