Last month, our film The Brussels business won the 51st edition of the Belfius bank press award, in the TV documentary category. Friedrich Moser and I publicly announced, on the day of the ceremony, that we would not accept the money from this bank and would rather donate it entirely to Finance watch. In a nutshell, their mission is to make finance serve society, and not the other way round.
Our main message with this film is that, after 40 years of globalisation, it would be naïve not to realise that fast growing market power by transnational actors has been translated into political power. These actors do play an increasingly important role in the power equation, and there is therefore an urgent need to regulate them with more convincing tools than the current EU voluntary based lobby register.
The case of finance is very interesting. Think about it: there are more financial lobbyists than MEPs in Brussels, and the annual amount spent by the financial industry is estimated to be €120m. Also bear in mind that we are not even talking about what is spent in national capitals. Now look where this is leading society as facts speak by themselves: the necessary measures have not been put in place to protect society from a possible financial crisis.
"Since 2008, banks have sharply reduced their lending to SMEs and enterprises in the real economy"
Since 2008, banks have sharply reduced their lending to SMEs and enterprises in the real economy. The money stays in the financial sector. According to the European central bank itself, loans to non-financial corporations decreased from 15 per cent in 2008 to zero per cent in 2013.
In addition, the size (the assets) of financial institutions of the EU now represents over 350 per cent of GDP in the EU and the financial stability board counts no less than 28 systemically important banks in its 2013 list. This shows that too many European banks remain too-big-to-fail or even 'too-big-to-fine' as claimed recently by the French government regarding one of its national champions.
"There is an urgent need to stop subsidising speculation"
Finally, imagine that the size of the derivatives market was still €465 trillion in December 2012. That's no less than nine times the world GDP and to quote Anat Admati, professor at Stanford university, "Five years after the crisis, we are no safer". No safer? Are we kidding?
So, as journalists we asked ourselves what we could do with the money from a bank that did little more than changing the colour and the name of its brand. We have decided to support the work of Finance watch who has been pushing for a series of measures that could be implemented with political will.
First of all, there is an urgent need to stop subsidising speculation. It's crucial to limit the speculative use of derivatives, regulate securitisation, end manipulation and align individual incentives with social returns. Second, time is now ripe to incentivise sustainable investing. As investors are increasingly short-term looking, governments must encourage labelling of financial products based on a 'social usefulness scale' and to provide tax incentives for long term, sustainable investment.
"Financial regulation should be simpler and more transparent"
Thirdly, the introduction of a leverage ratio and higher capital requirements are also needed to improve banks' robustness. Fourthly, financial regulation should be simpler and more transparent. What's the point in writing thousands of pages if these do not make society any 'safer'? Last but not least, trading activities should be separated from lending activities among Europe's largest universal banks.
Could we have accepted the money from Belfius bank without saying a word about what is going on beneath the surface? We do not think so. It was our duty as journalist to say it loud.