DRAGHI just another old Goldman Sachs #$%$ in POLITICAL CLOTHING and a BANK LOBBYING CLUB
It’s easy for Americans to labor under the delusion that other parts of the world have less obvious forms of corruption or its milder form, conflict of interest, than our revolving door system (one of my favorites was when the NY Fed staffer tasked to overseeing AIG left….to work at AIG of course).
But as a reminder of how backs get scratched in Europe, we have Mario Draghi. The former head of the Bank of Italy, now ECB chairman, was responsible for European operations for Goldman from 2002 to 2005, and predictably has no memory of the currency swaps deal that enabled Greece to camouflage the size of its budget deficit, lying its way into Euro Zone Membership. The new contretemps involves his membership in the Group of Thirty (aka G30), which despite its grand claims, is a bank lobbying group, even as he is serving as the head of the ECB.
Industry experts and corporate lobbyists have effectively captured key areas of policy advice within the European Commission, according to new research carried out by the Alliance for Lobbying Transparency and Ethics Regulation (ALTER-EU) which finds that two thirds of DG Enterprise and Industry’s advisory groups are dominated by corporate representatives.
The Der Spiegel piece provides an overview of the G30 and highlights that bank executives play prominent roles. Per the Google translation:
The International Banking Seminar of the Group of Thirty (G30) is held every year to coincide with the fall meeting of the International Monetary Fund (IMF) and World Bank, and is accessible only to selected visitors. Behind the G30 hides a group of leading bankers and economists who wish to make claims to influence decisions in the financial sector. Prominent members include senior representatives of Goldman Sachs, Morgan Stanley and JPMorgan Chase International and former and current heads of central banks.
The original complaint contended that given the ECB’s role in bank regulation, having anyone in an executive capacity, let alone its chief, represented a serious conflict of interest. The EU Ombudsman thinks the charge has enough meat to warrant an investigation:
The EU Ombudsman Nikiforos Diamandouros has instituted investigations against Draghi and sent to the Central Bank a mandatory questionnaire. Up to 31 October, the ECB will announce how they rated Draghi’s role in the G30 and whether it includes in its membership a conflict of interest.
The European Ombudsman investigates complaints against EU institutions, which can be introduced both by citizens and organizations. For the procedure caused a stir recently with the European Food Safety Authority (EFSA). Thus, the Ombudsman has asked the EFSA in December 2011 to strengthen its rules and procedures to prevent conflicts of interest.
So it appears that the EU Obudsman has been able to get some changes put in place, albeit at less powerful organizations. And the charge certainly looks valid. Draghi should not be involved with the G30 while he is active at the ECB. And if the EU Obudsman does find Draghi’s membership to be a conflict of interest, that has to be just as true for the other EU central bankers that are current participants. As a central banker, he can practice proctology on banks. He doesn’t need to be chatted up over caviar and champagne to get the intelligence he needs to do his job. If you don’t think the G30 is in the business of representing specific interests, I have a bridge I’d like to sell you. While this would be only one small step, it would still be gratifying to see pushback against the overly cozy relationship between central bankers and the banks they supposedly regulate.