Europe's post-crisis supervisory arrangements: a critique

Th is paper, based on presentations before audiences in Lisbon, provides an overview of the causes of the credit crisis and discusses one of the reports issued in the wake thereof, the De Larosière Report. Its main findings in respect of financial sector regulation are reviewed: a single European rulebook, colleges of supervisors, deposit guarantee schemes, bank resolution regimes and ‘living wills’ as well as transparent corporate structures of banks. The proposals for the establishment of a European Systemic Risk Board (ESRB) and a European System of Financial Supervisors (ESFS) are described and subjected to critical reviews, both from a legal angle and from a broader perspective. Emphasis is given to the European Banking Authority (EBA), as one of the agencies
within the ESFS. Suggestions are made to broaden the legal underpinning of the proposals in order to place the new bodies on a firm footing. This paper argues that, even though major steps toward a stronger Union-wide response to difficulties in the financial sector, the De Larosière proposals and the Commission’s legislative follow-up do not provide an adequate response to the lessons from the crisis. Federal authority for overseeing the financial sector is required: this implies Treaty change.