MEPs reject heads of EU bank watchdogs

Three of the candidates chosen to head up three new pan-European watchdogs that are intended to oversee the bloc's banking sector were met with strong opposition. MEPs complained that EU regulators had picked the wrong people for these important new roles.

Among the complaints were that the three chosen men did not have the gravity of experience, or influence to take on both banks and regulators in their roles as financial policemen.

"These people have to be competent, they have to be independent, and in particular have their own position towards the member states in order to perform their duties as foreseen in the voted regulations," a German Green MEP, Sven Giegold, said following a parliamentary hearing with the three officials. 

"Unfortunately, the selection procedure has so far been below par and the European Parliament's economic and monetary affairs (ECON) committee has raised alarm bells about this on various occasions," ECON committee chair and UK Labour MEP Sharon Bowles added.

Jean-Paul Gauzès, a French centre-right MEP who oversaw the creation of the European Banking Authority, even accused the EU executive of choosing poor candidates on purpose. "Today we see very well how the Boards have been formed with those people who will have the least influence," he said.

Gauzès added that the chairman of the French Markets Authority would have been better to head up one of the three watchdogs, the European Securities and Markets Authority.

The parliamentarians picked holes in the recruitment procedure, saying that salaries were not competitive enough and as a result applications were limited. They also criticised a 60-year age limit and the lack of a gender balance, given that all three candidates chosen were men.  

The three men were reportedly chosen by a 27-member board overseeing the three new supervisors, the European Systemic Risk Board (ESRB).

According to the Brussels rumour mill, the shortlist was put together by people lower down in the regulatory food chain, instilling doubts about their competences into MEPs' minds.

In addition, MEPs sent a letter to the Hungarian Presidency of the EU and the European Commission to demand higher salaries, higher budgets and more staff for the watchdogs.

The Commission now has all of two days to respond to MEPs' demands, a deadline parliamentary sources admit is completely unrealistic.

The establishment of EU's financial supervision architecture was decided in June 2009, at the height of the global financial crisis. It comprises a European Systemic Risk Board for macro-prudential supervision (ESRB) and European Supervisory Authorities (ESA) for micro-prudential supervision.

Since the ESRB's inception, the body has been heavily criticised for aligning itself too closely with the European Central Bank (ECB) and national central banks. Critics also point out that the new body has no binding legal powers. 

The ESRB "has been conceived as a 'reputational' body with a high-level composition that should influence the actions of policymakers and supervisors by means of its moral authority," according to the European Commission proposal. 

Observers say that the board's authority will depend on the eminence of the people on the General Board, the ESRB's decision-maker. 

The board will be made up of governors from the 27 national central banks, the president and vice-president of the ECB, a member of the European Commission and the chairpersons of the three ESAs.