Finance Watch

The year old public interest association, Finance Watch, has  become a regular at Brussels regulatory events and was described recently as “influential” by the Financial Times. That’s a great start for their ambitious program with its mission to make finance serve society. Wouldn’t that be nice? 

Finance Watch’s membership has grown to 66, including more than 40 trade unions, consumer groups, NGOs and other civil society organizations, together representing many millions of citizens. It has more than 5000 registered Friends (now 5001 with and a permanent staff of seven, soon to be 12. You too can get involved, even if mostly as an observer from across the ocean. I’m sure I can learn a lot from them.

Finance Watch’s staff have so far published six technical consultation responses and position papers covering bank capital (CRD4 / Basel III)shadow bankingbank structure (Liikanen)financial markets (MiFID)short selling and uncovered CDScredit ratings agencies (CRA3). I’m very much looking forward to a seventh on retail investment products (PRIPs), which is coming soon. According to Finance Watch:

It will look at the asymmetries of information between retail investors and those who design and sell complex retail investment products. It will also raise some important questions about the wider impact of these fast-growing products on society.

Finance Watch’s staff has held more than a hundred meetings with policymakers, given evidence to six formal parliamentary hearings in Brussels, Paris, London and Washington and spoken at dozens of public events. Who is doing anything like that in the United States? The United States Proxy Exchange  has similar ambitions but with a focus on retail shareowners. See our executive directors Reflections on 2011.

Both organizations would like to be more involved in legislative and other efforts but both suffer from resource constraints.

Finance Watch was created as a counter-lobby to the small army of financial industry lobbyists (around 350 in Brussels). In contrast, the number of financial industry lobbyists in Washington is far greater. A mid-2010 study found that more than 1,400 former members of Congress, Capitol Hill staffers or federal employees registered as lobbyists on behalf of the financial services sector since the start of 2009. (Washington Post, 6/4/2010)

Finance Watch symbolises the need to restore balance between public and private interests in financial reform. As they note,

When policymakers are presented with both sides of the argument it is far harder for them to be ‘captured’ by special interests.

The democratic process also benefits when the voting public understands how financial reforms improve the well being of everyone. Finance Watch is helping by publishing cartoons and briefing materials but there is a lot more to be done. Reviewing Finance Watch’s recent cartoon make me think someone should be writing a corporate governance graphic novel or at least a more friendly Shareowner’s Action Handbook… whatever it takes to build a movement.

Finance Watch is off to a great start. I’m looking forward to following their tweets @forfinancewatch and reading their newsletters. They’ve received funding from several philanthropic foundations “pilot funding” directly from the EU budget to help get started.  With any luck, they should continue to make progress. Where’s our US counterpart?

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