Three members of European Parliament have accused internal market commissioner Charlie McCreevy, who has been a strong advocate for the private equity industry’s self-regulation, as behaving like a “paid lobbyist of the finance industry” in a letter to the European Commission president.
McCreevy: under fire
Poul Nyrup Rasmussen, head of the Party of European Socialists and an outspoken critic of the private equity industry, along with fellow members of parliament Martin Schultz and Pervenche Berès, wrote to José Manuel Barroso suggesting that McCreevy is trying to avoid implementing regulation across the private equity and hedge fund industries.
“To add to this insult, he now pleads with industry to help him avoid regulation, using inflammatory and insulting language,” the letter stated, citing a speech to the British Private Equity and Venture Capital Association, in which McCreevy referred to “trigger happy” regulators.
The European Commission is currently considering its response – which may or may not involve law changes – to two reports passed by parliament calling for a strengthening of regulatory regimes affecting hedge funds and private equity.
In light of the financial crisis, there is growing scepticism of the very concept of self-regulation.
Private equity industry practitioners, meanwhile, are worried that the escalating financial crisis is increasing the likelihood of an increased regulatory burden across Europe.
“In light of the financial crisis, there is a growing scepticism of the very concept of self-regulation. There continues to be antipathy towards private equity, which will be compounded by negative headlines that may emerge in the coming months as economic conditions deteriorate,” Jonathan Russell, chairman of the European Private Equity and Venture Capital Association, said in a letter to the trade group’s members.
In October, Cormac O’Haire, chief financial officer of London-based private equity firm Terra Firma, told delegates at PEI Media’s COO and CFO conference the prospect of regulation is a very real danger. “The Commission is facing a tidal wave of political pressure to regulate,” he said.
The Brussels Task Force, a group set up by the EVCA to respond to the European Parliament’s request for policy change, is currently working on a submission to the Commission to be delivered in February 2009.