“For the locusts in the finance sector, a new age is dawning.” This is how German Social Democrat and Member of the European Parliament Udo Bullmann commented on the prospect of new EU-wide regulations for hedge funds.
Bullmann is the spokesperson on economic matters for the delegation of German Social Democrats in the parliament. Bernhard Rapkay is the chair of the Social Democratic group, and Rapkay is quoted saying exactly the same thing in his own press release. “It is high time that we get serious about regulating highly speculative funds,” Bullmann and Rapkay continued unisono. “Europe cannot look on without doing anything when financial gamblers are driving whole countries or branches of industry to the wall.” Party discipline in the German Social Democratic Party appears to be very strong indeed!
The comments were made last Tuesday after the parliament’s Committee on Economic and Monetary Affairs voted in favor of a new European Union directive regulating “alternative investment fund managers.” Later that day, the finance ministers of the 27 EU member states likewise gave their nod to the directive. The action had long been resisted by the United Kingdom, where some 80% of Europe’s hedge funds are said to be based. But on the urging of Germany, the matter was now brought to a vote. “That’s the way it is in Europe,” German Finance Minister Wolfgang Schäuble remarked dryly. “There are decisions that are taken against [the will of] a single member state.” A final version of the law has still to be approved by the full parliament.
The move came amidst widespread talk in Europe of a full-blown “euro-crisis” and vague accusations that financial actors were guilty of “speculation” against the securities of highly indebted EU states like Greece and/or against the euro itself.
The Social Democrats’ “locusts” comment harks back to April 2005, when then party chairman Franz Müntefering launched an attack on investment funds, charging that:
Some finance investors don’t waste a moment’s thought for the people whose jobs they are destroying. They remain anonymous, faceless, they descend on enterprises like swarms of locusts, pick them bare and then move on.