Friday, October 31, 2014

E.U. Parliament Approves New Commission, with Lord Hill as Financial Services Commissioner

The E.U. Parliament has approved the new European Commission, with Lord Hill as Financial Services Commissioner, by a vote of 423 to 209, with 67 abstentions. The Commission, which will take office on November 1, 2014, is headed by Jean-Claude Juncker. In a statement ahead of the vote, President-designate Juncker said that he will introduce in the first three months of his mandate a legislative package to spur jobs and investment growth. Noting that the level of investment in the E.U. dropped by just under €500 billion, or 20%, after its latest peak in 2007, he warned that the E.U. is facing an investment gap and must work to bridge that gap. In that spirit, the Commission will create a Capital Markets Union designed to create vibrant equities funding through securities offerings and decrease the E.U.’s heavy reliance on bank funding. He vowed to oppose too prescriptive, too detailed and burdensome regulations, notably when it comes to small and medium sized enterprises (SMEs), which he said are the backbone of the economy, creating more than 85% of new jobs in Europe.

Lord Jonathan Hill will replace Michel Barnier of France as the E.U.’s top securities and banking regulator. Similar to Commissioner Barnier, Lord Hill emphasized that the avoidance of regulatory arbitrage is a paramount concern, both within the E.U. and with the United States. He will continue Commissioner Barnier’s fight to achieve financial regulatory convergence with the U.S. He has emphasized that the free flow of capital, to which he is totally committed, greatly depends on restarting a private, high quality securitization market. This will be one of his top priorities. He said the choice between regulation and growth is a false dichotomy. Regulators can encourage better securitization without increasing risk.