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December 13, 2011

Are Bank Profits Really Worth This?

British Prime Minister Cameron vetoed proposed EU Treaty changes that all 26 other member of the EU voted for.  The changes were part of an agreement aimed at addressing issues at the core of the ongoing European financial crisis and, fundamentally, saving the Euro and the Eurozone.  Cameron did this, he said, to protect the UK’s financial services industry referred to as “The City,” Britain’s equivalent of Wall Street.   

The Financial Times has a must-read column this morning entitled “Was This the Moment UK Stumbled Out of Europe?”:

“Lie back and think of England. Historians may look on 2011 as the year in which two great unions began to fracture. Britain stumbled away from Europe, and Scotland prepared to bid farewell to the United Kingdom. The one dynamic gave impetus to the other….Mr Cameron’s coalition is now in a lose-lose position. If the eurozone fails in the effort to rescue the single currency, Britain will be caught in the ensuing economic tsunami. If the euro is eventually saved by the creation of a fiscal union [without Britain due to the veto], Britain will find itself marginalised in European Union decision-making in areas pivotal to its own prosperity….But will Mr Cameron win plaudits for seeking special arrangements for City bankers at the expense of Britain’s wider industrial interests?”

The Prime Minister put the interests of London’s financial sector above every other interest of Britain.  Think about that.  One country vetoes the wishes of the 27 other members of the EU to protect just one industry.  Now, no one knows how the treaty changes would have worked and if they would have accomplished the goals sought.  But, Cameron didn’t raise those issues.  He didn’t offer an alternative or a better way to accomplish those goals.  No.  He vetoed the changes outright to protect London’s bankers and banking sector. 

Interestingly, even the UK’s financial industry is questioning the wisdom of the veto:  “Mr. Cameron’s price for signing that treaty was a list of safeguards to protect Britain’s large financial-services industry from future regulation and preserve its sovereignty to impose its own regulations—even if they are tougher than the EU’s. The Europeans called his bluff, complaining Mr. Cameron was trying to gain leverage during the crisis [which would have opened the Treaty up to every country seeking some special interest provision and, thereby, dooming the changes entirely].  Now, financial firms and their lobbyists worry that Mr. Cameron’s move will come back to bite them at the negotiating table.”  

Most tellingly, Cameron asserted that the interests of UK’s financial industry was the same as the country’s national interest:  “‘I went to Brussels with one objective, to protect Britain’s national interest, and that is what I did.'”

“Lie back and think of England” indeed.  



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