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People always talk about “the cost of regulation”, but what is the current Regulation cost? That is, how much does it cost to provide office space, training, facilities and the like for an important regulator such as European banking authority? Thanks to the transparency process for your contracts, we now know.
There are some interesting elements there, for example, the EBA has a very Favorable Bloomberg Finance LP agreement, or only has a terminal in the building:
Actually, they spend more with several other data suppliers: there are € 56,319 with Dealogic and € 102,188 with S&P. And there is a € 3,969 contract with Deloitte to train staff on how to use “financial IT systems”.
The contract list also includes the lease of your office, a furniture provider, in addition to a large amount of “leadership training”, “skills development” and “collaborative work” consulting arrangements that are frankly, are easy to make fun out of context but quite essential to administer a multinational organization. The EBA spent € 96,128 on “Training and Language Tests” in 2024, which seems quite good, since it has to coordinate with 27 national authorities.
But our attention was immediately called to a budget article. If you want to evaluate institutional strength and vitality, this is always a good place to begin:
The EBA has around 250 employees. He is spending approximately sixty euros per head in coffee per year. Whatever the allocation of general expenses, profits and capital costs, which cannot be more than a cup and a half every week. It is possible that a coffee is included in the contract of € 209,966 for “catering services and supplies, but as you cut the numbers, it cannot escape the conclusion: the coffee budget is only large enough to supply guests and in conference rooms.
In other words, the eba is breaking The Fundamental Law of Management of Patrick McKenzie:
This sounds like a trivial observation and is not:
No organization that makes its people pay for coffee wants to win.
– Patrick McKenzie (@patio11) July 25, 2024
As he says, free coffee is far from being trivial. EBA is a really important organization, which always receives new responsibilities (such as cryptographic regulation and Inspection at the data centers site) By legislators who do not always have the same enthusiasm to assign enough budget. He Minutes of the meetings of its Board of Directors Regularly discuss the intensity of resource pressure; He recently raised the possibility of a 12 -month moratorium on new presentations to his website of questions and answers, to eliminate the accumulation of questions.
This has practical consequences for the banking industry: recently, the EBA seems to be Taken a pass In an extremely important decision that affects several living mergers (“Danish commitment”) because doing so would require “deeper and wider consideration” than they could give.
It is extremely difficult to produce a first class work in one environment less than the first class, and the availability of decent quality coffee is a canary in the coal mine for themselves employees are being supported; It’s like the legendary “No m and more brown“In Rock Tours. If the EBA multiplies the amount it spent on the amenities of creatures in general for a ten factor, this could cost a million euros, a rounding error in a rounding error in the context of the EU general budget.
Since even a minor regulatory misunderstanding can have enormous implications, it seems cheap at the price.