Does the Emperor Have Financial Crisis Clothes? Reflections on the Legal Basis of the European Banking Authority
| Date | 01 July 2011 |
| Author | Elaine Fahey |
| DOI | http://doi.org/10.1111/j.1468-2230.2011.00861.x |
| Published date | 01 July 2011 |
LEGISLATION
Does the Emperor Have Financial Crisis Clothes?
Re£ections on the Legal Basis of the European
Banking Authority
Elaine Fahey
n
The European Union institutional package launched in response to the ¢nancial crisis used
Article 114 TFEU as its legal basis. The author explores the legal basis for one of the European
SupervisoryAuthorities recently established ^ the European Banking Authority (EBA).The use
of Article 114TFEU, the mainTreatybasi s used to harmonise laws in order to further the internal
market, as the foundation forthe EBA, is considered in detail. A paradox of contemporary EU
institutional law is assessed here, considering whether on the one hand, the EBA is fu nctionally
both too narrow and too broad as a matter of law, while on the other hand, it may prove to be
central to restoring con¢de nce in EU regulatory powers, rendering it ‘too big to fail,’ despite its
slender foundations in Article 114 TFEU.
INTRODUCTION
While the precise causes of the global ¢nancial crisis may still be the subject of
re£ection, the EuropeanUnion responded to the crisis principally with an insti-
tutional or ‘supervisory architecture’ package: a European System of Financial
Supervision, comprising several institutions known as European Supervisory
Authorities (ESA’s).
1
A curiosity arises from the fact that all of these institutions
now enacted into EU law are grounded in Article 114 of the Treaty on the Func-
tioning of theEuropean Union(TFEU) as their legalbase.
2
Article 114 TFEU was
and is the controversial ‘problem child’ of the Laeken Declaration
3
and remains
n
Lecturer, School of Social Sciences and Law, Dublin Institute of Technology, Ireland.Visiting Max
Weber Fellow, European Univeristy Institute, Florence, Italy. I am very grateful to the conference
discussants at the European University Institute conference ‘2007^2010 Financial and
EconomicCrisis: Causes,Consequences,and PolicyResponses’(April 2010) andto Ester Herlin-Karnell,
Stephen Carruthers and the reviewers for theircomments. All errors are solely those of the author.
1Comprising a European System of Financial Supervisors (ESFS) and a European Systemic Risk
Board (ESRB), consisting of a network of national ¢nancial supervisors working in tandem with
new ESA’s, created by the transformation of existing Committees for the banking securities and
insurance and occupational pensions sectors: European Banking Authority COM(2009) 501;
European Insurance and Occupational Pensions Authority (COM(2009) 502 ¢nal); European
Securities and Markets Authority (COM(2009) 503) all dated 23 September 2009; European
Systemic Risk Board (COM(2009) 499, 23 September 2009). See, for a comprehensive survey,
E. Ferran‘Understandingthe NewInstitutional Architecture of EU Financial Market Supervision’
20 November2010 at http://ssrn.com/abstract=1701147 (last visited 17February 2011).
2Referredto as Article 114 TFEU (ex Article 95 EC).
3Laeken European Council, Laeken declarationon the future of theUnion, SN 273/01,15 December
2001:se e S.Weatherill ‘Competence and Legitimacy’ in C. Barnardand O. Odudu (eds),TheOuter
Limitsof European UnionLaw (Oxford: Hart, 2009) 17.
r2011The Author.The Modern Law Review r2011 The ModernLaw Review Limited.
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2011) 74(4) 581^595
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