On the Third Capital Requirements Directive (North Thanet Liberal Democrats)

North Thanet Liberal Democrats <info@north-thanetlibdems.org.uk>

On the Third Capital Requirements Directive

July 7, 2010 10:59 AM
By Sharon Bowles MEP in European Parliament Plenary session
Originally published by Sharon Bowles MEP

Reform of Bank Capital is Europe's most important legislative response to the Crisis so far, and deserves big billing alongside supervision.

Undercapitalised trading books were a fundamental cause of the crisis, making speculative proprietary trading attractive and cost free. The three to four-fold increase of capital required against such trading positions should be welcomed as directly addressing the root cause of the crisis and cutting down the motive for casino banking.

On remuneration, when I first suggested that big bonuses and pension lump sums be paid in subordinated debt, many said this would not fly. So I thank the rapporteur and fellow shadows for supporting this idea, which we transformed into contingent capital and is already becoming part of mainstream thinking elsewhere.

I regret that my specific tax avoidance text could not be included, but we have prohibited payment in ways designed to undermine the purpose of the directive.