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After financial booms collapse into a bust, there is a usually period of sober reflection during which people nurse their hangover and try to come to grips with what has happened and why. A period of “sermons and soda water” before a new round of feasting can be started.



And the present financial crisis has been no exception, with regulators and central banks, the IMF, and even some bankers wondering how market pressures could have led individuals and institutions to build up unsustainable levels of debt to spend on junk. Are there gaps in the regulatory system and are existing regulations being properly enforced?



But this mood has not affected Charlie McCreevy, the European Commissioner in charge of the regulation of services.



He is still fully focussed on blasting “pro-regulation junkies and lobbyists” who want to tackle private equity, hedge funds, and sovereign wealth funds, as he put it in a recent speech to Allied Irish banks.



Although the financial crisis has left Mr McCreevy punch-drunk, his speech is a reminder of the sort of attitude that has led to the current turmoil.



First, a blind, ideological opposition to financial regulation. His argument: “It is worth pointing out that it was actually in the regulated sector – and not the unregulated sector – that the roots of the current financial turmoil were sown.”



And he may have a point. Regulations that are not enforced can be more dangerous than no regulations at all. One of the more astonishing aspects of the latest bout of frenetic financial speculation was the way that financial actors were allowed to build up hidden, off-balance sheet liabilities. And that barely a decade after such malpractices played a central role in the Enron scandal.



And with authorities like Mr McCreevy it is not surprising that regulations are not enforced – as a sort of second best to having no regulation at all.



Another trait displayed by the McCreevy speech is a failure to see the possible risks in certain financial operations. “I have never viewed the private equity industry as anything other than a positive force for good …,” he says. While assuring his listeners that he himself is sceptical about new regulation, he has to admit that his view is not universally shared by all policymakers.



In that context, he says that the main policy concerns centre on transparency, governance, and accountability, omitting two major concerns raised by trade unions and others: the debt built up by private equiteers and their taxation. And it is the debt created in the leverage buyout boom that could prolong the current financial crisis and its impact on the real economy.



Let’s hope the European Parliament and other EU bodies are more realistic and sober than Mr McCreevy!