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Monday, October 25, 2010

Commons weighs in on deposit schemes

Hats off to the House of Commons.

Earlier today it grasped the nettle and employed the Lisbon Treaty's 'yellow card' procedure for the first time (if nine national parliaments object to a proposal from the Commission on 'subsidiarity' grounds, within an eight-week window, the Commission is obliged to re-consider - but not scrap - the proposal). The House of Lords was slightly quicker off the blocks, using the procedure last week to object to the EU's proposed directive on seasonal workers from third countries.

The Commons provided a "reasoned opinion" on the proposal to amend the so-called Investor Compensation Schemes Directive, objecting to it on subsidiarity grounds.

As we've argued before, this proposal raises various concerns, as under the proposed rules member states would be required to lend to each other should a bank go bust and deposits needed to be guaranteed. As the Swedish Parliament argued, this presents a 'moral hazard' since some member states might be tempted to under-fund their scheme, knowing that someone else would pick up the final bill.

The House of Commons joined its counterparts in Sweden, Germany and Austria in objecting to the proposal.

Only problem is, the deadline for objecting to the proposal expires today. Eight weeks doesn't exactly give national parliaments plenty of time to mobilise, particularly when, as it did now, it coincides with parliamentary recess in most European countries (almost as if it was planned).

We confess to not being up to speed with how many national parliaments actually managed to formally object to the proposal in the end - but will be back shortly with an update.

Regardless, it's good to see MPs taking responsibility.

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