Obamas bank reforms are not right for us- EU ministersBy DPA • Feb 16th, 2010 • Category: Business
Brussels, Feb 16, The medicine recommended by US President Barack Obama to cut Wall Street down to size is not suitable for the European Union EU), the bloc’s finance ministers are expected to say in a report set for approval Tuesday.
The White House has endorsed Jan 21 former Federal Reserve chairman Paul Volcker’s proposals to limit the size of banks, ban them from investing in hedge funds and exclude them from proprietary trading, or trading on their own accounts.
The aim is to avoid a repetition of financial institutions being “too big to fail”, forcing taxpayers to bail them out as it happened in the past 18 months.
But a draft EU declaration, seen by DPA late Monday warns that “the application of the (so-called) Volcker rule in the EU may not be consistent with the current principles of the (bloc’s) internal market and universal banking”.
The three-page document also says that getting money back from banks that were bailed out by the taxpayer through a ‘financial crisis responsibility fee’ – like the US intends to do – would not work in the EU, as “public interventions in support of the financial sector varied considerably across countries”.
However, EU ministers appeared more open to the idea of establishing an EU-wide or international bail out fund or slapping a financial transaction tax on banks, as they stressed that “such measures could improve the incentives in the financial sector to internalise risks”.
Proposals on the matter are expected to be presented by the Internal Monetary Fund (IMF) in March, with a view for them to be discussed by the leaders of G20 countries at a summit scheduled for June 26-26 in Toronto, Canada.
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