European Banking Industry: Brussels reforms target lending to Europe’s credit-starved SMEs- by James Fontanella-Khan

Brussels presented a series of reforms on Thursday to unlock long-term financing in an attempt to revive lending to Europe’s credit-starved small and medium companies and reignite infrastructure investment across the continent.

The European Commission said that it would take decisive steps to bolster the moribund market for securitisation, reinforce the capacity of occupational pension funds to invest in financial assets and strengthen the emerging online crowdfunding sector.

The announcement indicates Brussels’ main reform priorities for the financial sector in the next five years to speed up Europe’s recovery and steady return to growth in the aftermath of the worst economic crisis since the 1930s.

Read more: Brussels reforms target lending to Europe’s credit-starved SMEs - FT.com

Germany Digs In Against Risk Sharing in EU Bank-Failure Plan - by Rebecca Christie and Rainer Buergi

Germany argued against a joint backstop for struggling euro-area banks as European finance ministers renewed their debate on how to handle the costs of managing failed lenders.

German Finance Minister Wolfgang Schaeuble called on his colleagues to rein in their ambitions for the Single Resolution Mechanism proposed by the European Commission, which includes a common fund filled by levies on the financial industry. While an agreement is unlikely today, it can be achieved by year-end as long as among European Union member states don’t insist on a joint fund immediately, he said.

“It’s not disputed in principle that we need a European fund,” Schaeuble told reporters yesterday at the start of two days of talks in Brussels. “A fund needs a levy” on banks, “but the levy needs a clear legal basis. There are different opinions on that, but if you want a safe legal basis, you’d better take the safe route.”

Finance ministers are racing to meet a year-end deadline to reach a common position on the bank-failure plan so that a final agreement on the legislation with the European Parliament is possible before the assembly stops work before elections in May. The European Central Bank, which takes over euro-area financial supervision next year, wants a European resolution mechanism in place as soon as possible after it begins oversight.

Read more: Germany Digs In Against Risk Sharing in EU Bank-Failure Plan - SFGate

Little to look forward to for EU in 2013

The year 2012 has come to an end, and with it comes a bitter realization. No matter how much help is given to ailing countries like Greece, however large the bailouts they receive, the fundamental problems of the monetary union will not have been solved.

The economic gulf between member countries of the EU remains too large.

Could it be that the euro, the tremendous prestige project of European integration, is inherently flawed? None less than Mario Draghi, president of the European Central Bank, has acknowledged that the currency union, in its current form, "isn't sustainable without taking further steps."

Chancellor Angela Merkel described as a "foundational error" in the euro that the single currency has not yet led to economic convergence between member countries.
The EU would like to change that. At the most recent summit in December, Merkel drove the point home. "I believe that the member states, but also the EU as a whole, are ready to push profound changes through."

Read more: Little to look forward to for EU in 2013 | Europe | DW.DE | 31.12.2012

European Banking Union? In cautionary move, Europe centralizes bank oversight

European Union finance ministers reached an agreement early Thursday to create a single supervisor for their banks - one of the most significant transfers of authority from national governments to regional authorities since the creation of the euro currency.

Under the deal, banks with more than $39 billion in assets supervised or those that represent a significant proportion of their national economies will be placed under the oversight of the European Central Bank.

The deal gives the ECB broad powers, including the ability to grant and withdraw banking licenses, investigate institutions, and financially sanction banks that don't follow the rules.

But perhaps most important is that it paves the way for Europe's rescue fund to directly rescue the continent's troubled banks.

"It's real progress that opens up interesting possibilities," said French Finance Minister Pierre Moscovici, without giving a specific date for when the first banks could seek direct aid.

 Read more: In cautionary move, Europe centralizes bank oversight - CBS News

Divided EU leaders meeting for 'big leap' summit

A stormy two-day summit kicks off on Thursday (28 June), with EU leaders still at odds over ceding core national powers to Brussels in return for debt-pooling, as well as creating a "banking union" with central supervision and deposit guarantees.

The weather in Brussels is forecast to match the mood of the EU event, which starts at 3pm local time: a stuffy summer's day ending with "violent" thunderstorms.

The less contentious items are piled up in the afternoon: a "growth and jobs" plan of €130 billion, mostly consisting of unused EU money, and a discussion with the head of the European Parliament on the bloc's next budget for 2014-2020.

Read more: EUobserver.com / Institutional Affairs / Divided EU leaders meeting for 'big leap' summit

Europe vows closer union at G20 summit

Under pressure from financial markets and anxious world leaders, Europe agreed on Monday to move towards a more integrated banking system to stem a debt crisis that threatens the survival of the euro.

At a Group of 20 summit of the world's leading industrialized and developing economies in this Mexican resort, Germany and its big euro zone partners took the unusual step of spelling out in detail measures to complete the economic and monetary union they launched to great fanfare 13 years ago.

Among the commitments in a draft G20 communique was a pledge to consider concrete steps towards a "more integrated financial architecture" in Europe that would include common banking supervision and firm guarantees to repay bank depositors.

Read more: Europe vows closer union at G20 summit - Yahoo! Eurosport UK

Europe Moves Closer to Banktatorship

The present crisis, which is largely the result of excessive credit expansion and poor risk management by EU banks, is being used by the European Commission and the ECB to establish a euro-wide ”banking union” and to impose savage cuts to social programs, health care, and pensions.  The response by EU policymakers is a social counterrevolution designed to transform the 17-member monetary union into a permanent ”austerity zone” ruled by corporate elites and big finance. 

The eurozone’s permanent bailout fund, the ESM, has not yet been ratified by all 17 members and already the European Commission wants to change its mandate to include direct bailouts to banks.   The direct funding of underwater banks is a blatant power-grab, an attempt to establish the primacy of banks in the same way that the TARP was used to create Too Big To Fail in the US. TBTF means that the banks have merged with the state and that taxpayers provide blanket guarantees for  their survival. Europe is moving fast towards this same model.

Read more: Europe Moves Closer to Banktatorship » Counterpunch: Tells the Facts, Names the Names