Public interest, not vested interest: Taking the fight for better banking to Brussels

You produce some thorough research (you think); you marshall compelling and eloquent arguments (you hope); you make your case to politicians, legislators and the media; you seem to be gathering momentum; legislation is proposed and some of your core principles adopted; some time later it hits the statute books... and then nothing much changes.

What went wrong?

Well what went wrong is the army of highly paid, highly sophisticated and well-resourced lobbyists that fiercely and single-mindedly represent corporate and financial interests to our legislators. Finance Watch estimates that the financial lobby alone employs about 700 people for a total annual budget of between €300 m and €400 m in Brussels.

This is a particular problem in the arena of financial reform because it is easy for lobbyists to baffle politicians with manufactured complexity - to blind them with economic pseudo-science. Of course many MPs and MEPs can and do combine intellectual clout with a working knowledge of banking to sometimes great effect in holding corporations to account, as evidenced at Westminster by the often excellent interventions of the Treasury Select Committee.

More generally, the financial lobby uses complexity as a smokescreen, and as a tool to wear down the political will for change – it just all becomes too difficult. Despite this, political will has held firm enough to produce several proposals for reform in the EU (an alphabet soup of directives I shall not attempt to serve to you now, but see our EU newsletter for more details).

But when lobbyists lose the argument with politicians they have a Plan B (funny how everyone seems to have one of these apart from the Chancellor). What the lobbyists can achieve is to neuter the intention of politicians during the process of writing and implementing the details of legislation by inserting carefully crafted loopholes, rewording clauses in subtle but profound ways, and generally bending the law to their will. This is the process currently going on in the US with the Dodd-Frank Act.

Civil society groups have not had the resources or expertise to counter this, hence the establishment of Finance Watch.  The genesis of this organisation is quite remarkable in itself. Last year a group of MEPs led by Pascal Canfin issued a call for a Finance Watch. “Please come and lobby us” they said, “because we know we are being swamped by the financial lobby and we need your help”. nef answered the call, as did many other organisations including Oxfam, Friends of the Earth and the World Development Movement.

Surely just another set of vested interests? Well, yes if you call explicit objectives to improve economic, social and environmental outcomes a vested interest, as opposed to large financial corporations whose sole purpose seems to be stuff their wallets with as much of your cash as possible. I would rather call it the public interest.

But whatever you call the two sides, the battle has been entirely one-sided up to now. The staff of Finance Watch will most likely initially be outnumbered by 100 to 1, and will never match the resources of the financial lobbyists. That is why they will need help from nef and the other members, and from the public too. We may be engaged in a fight with Goliath, but at last David has arrived on the field of battle.