Obama and Brown urged to join hands on financial regulation

Former Danish prime minister proposes transatlantic regime to avert another banking crisis
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The Independent Online

Poul Nyrup Rasmussen, the leading MEP and former Danish prime minister, is lobbying advisers to Gordon Brown and Barack Obama over plans to create a transatlantic financial regulatory regime.

Mr Rasmussen is drawing up what he describes as a "roadmap" to regulation that would avoid another financial crisis. He is taking guidance from the likes of James Galbraith, son of the legendary economist JK and a prominent adviser to Mr Obama, and will travel to the US twice next month to meet senior politicians and economists, including Barney Frank, the congressman who chairs the House of Representatives Financial Services Committee, and Joseph Stiglitz, who served in Bill Clinton's administration in the 1990s.

Mr Rasmussen will visit leading universities such as Berkeley and Stanford to gather support for his proposals.

The roadmap calls for an end to excessive borrowing by banks, hedge funds and private equity, and sets limits on remuneration for executives.

"This time is very interesting for the transatlantic balance between progressives – this has not been seen since the early Clinton years," said Mr Rasmussen. "We're very worried about the interplay between the financial markets and the real economy."

He has called a meeting of left-wing leaders to take place in Brussels on 5 November, and hopes this will also be attended by staff from the UK Treasury. A draft of the roadmap will be discussed and then taken forward to key politicians in Europe and the US.

Mr Rasmussen is also due to meet European Commission president José Manuel Barroso early next month. In May, he sent a letter to Mr Barroso signed by nine former prime ministers and the EC President's three predecessors in the post. The letter stated: "This financial crisis shows all too clearly that the financial industry is incapable of self-regulation. There is a need to improve the supervision and regulatory frameworks for banks."

Earlier this month he wrote to Mr Barroso again, criticising him for not responding to the letter. He cited Avaaz, an internet movement that has gathered 126,000 signatures in support of "fixing fundamental flaws and loopholes which made the global financial crisis possible, including basic problems of debt, incentives and transparency".

Mr Rasmussen believes his roadmap will prevent mass unemployment. "Preventing the financial meltdown was the first urgent step," he said. "Now we must urgently take action on a second stage: to build better regulation and do all we can to avoid the financial crisis turning into a long-lasting recession."

Mr Rasmussen was the Danish prime minister between 1993 and 2001. He was elected to the European Parliament in 2004 and is the President of the Party of European Socialists.