U.K. Has Guarantee on EU Bank Regulator, European Official Says
Britain has secured agreement that a proposed European Union financial services regulator won’t impinge on national authorities, a European official said.
Arriving at an EU summit in Brussels yesterday, Prime Minister Gordon Brown said he would defend the U.K.’s powers as the sole supervisor of the more than 600 British and foreign banks that make London Europe’s financial center.
“It is only logical that where a supervisory decision will have an impact on the taxpayer, that decision should be for the relevant national authority,” Brown told a pre-summit press conference.
The European official, speaking to reporters on the condition of anonymity, said EU leaders had subsequently affirmed language agreed upon at a June 9 meeting of finance ministers, providing that EU regulators “should not impinge in any way on member states’ fiscal responsibilities.”
The clash over policing the banks had threatened to overshadow a summit meant to take stock of efforts to turn around the worst recession since World War II and to complete work on legal guarantees to persuade Irish voters to pass the bloc’s new governing treaty, which they rejected last year.
European governments have spent more than 165 billion euros ($229 billion) to shore up banks staggering from $454 billion in writedowns and credit losses, about a third of the worldwide total of $1.46 trillion.
EU Answer to U.S.
The regulatory proposals are Europe’s answer to President Barack Obama’s bid to refashion supervision of the U.S. financial system, the epicenter of the crisis.
Speaking early this morning, neither European Commission President Jose Barroso nor the Czech Prime Minister Jan Fischer, whose country currently holds the rotating EU presidency, addressed the negotiations directly cash advance. Barroso said there was “a very high level of convergence around our proposals” yet no “formal” decision. Fischer said the meeting did “reach agreement that a European council for systemic risk should come into existence.”
The EU summit resumes today at 10 a.m.
Setting “binding common European rules” would “be a major step forward qualitatively,” German Chancellor Angela Merkel said.
In the battle over financial oversight, Britain said previous European Commission proposals to stiffen cross-border supervision could have forced British taxpayers to pay for bailouts or recapitalizations that are ordered by a central regulator.
As the largest of the 11 EU countries not using the euro currency, Britain also opposes putting the president of the European Central Bank in charge of a board to monitor systemic risk.
Toxic Assets
Finnish Prime Minister Matti Vanhanen expressed concern that European banks still have toxic assets on their balance sheets.
“Are all these toxic assets already known?” Vanhanen said in an interview. “How much toxic assets should be cleaned before the real confidence in the banking sector can start?”
Also up for discussion at the two-day summit are proposals that would give authorities power to regulate rating companies and clearing houses for derivatives trading, and impose rules on short-selling in emergencies.
Filed under: economics by Forest