EU Internal Market Commissioner Charlie McCreevy is in a tough spot. He seems to be fighting a losing, although justified, battle against those EU bureaucrats who seem to be using the events of the credit crunch as a rationale to impose more regulation.

MEPs yesterday voted by 562-86 votes to regulate "all relevant financial market participants, including hedge funds and private equity."

The European Parliament called Tuesday for strict new EU rules governing high-risk private equity and hedge funds. It is asking the Commission to review existing rules governing funds and to put forward legislation to cover any gaps and require greater transparency on their investments. It also wants all financial institutions to follow capital requirement rules that mean they must put aside money to cover the risk they are taking on.

McCreevy, in turn, has underlined that the responsibility for the current crisis lies with regulated actors such as mortgage lenders, banks and credit rating agencies. Hedge funds and private equity "were not the causes of the turmoil," he notes. "I don't believe it is necessary at this stage to tar them with the same brush as we use for the regulated sector," he adds.

If a "shadow" of these proposed extra regulation is approved, then rest assured we will have a plethora of financial regulation and legislation that would create an atmosphere of a totalitarian financial regime. And this would undoubtedly lead to the demise of the western financial centres, along with a distrustful, cold and Commie-like atmosphere bound to dissuade and potential foreign direct investment.

It goes without saying that the Internal Market Commissioner is without numbers in this fight. He needs support and the backing of respected honchos and governments to prove his point, which many would argue is the right way forward.