EU to get super watchdog

Brussels, Sept. 23: Europe on Wednesday laid out new proposals to police its banks and financial markets, seeking to set an example on the eve of a summit of G20 major economies.
But holes in the small print — not least an inability to commit to publish its demands for action by individual countries — mean a slew of new regulatory authorities may yet be muzzled at birth.
“Everyone is talking about it, but this European proposal is the first to spell out all the details,” said the Economic and Monetary Affairs Commissioner, Mr Joaquin Almunia.
“Sometimes we are criticised as being slow to respond,” the Spaniard added of painful barbs since the financial crisis first hit late last year. “But here, we are the first.”
Watchdogs overseeing banks, insurers and securities firms are to operate under a new European Systemic Risk Board, expected to deliver early warnings before major economic shocks.
The proposals come a year after the collapse of US bank Lehman Brothers.
“Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of euros into the banks,” said the European Commission President, Mr Jose Manuel Barroso.
“This European system can also inspire a global one and we will argue for that in Pittsburgh,” where the leaders of the world’s biggest economies are holding a two-day summit starting on Thursday.
But with approval required by all 27 EU governments and the European parliament — and the City of London concerned at Britain giving up powers — the commission blueprint could be changed before it sees the light of day.
The European System of Financial Supervisors composed of national supervisors and the three new sector-specific authorities are due to get up and running by the end of next year.
Britain, which is not part of the eurozone, is also concerned at the mooted prospect of the European Central Bank President, Mr Jean-Claude Trichet, heading up the new systemic risk body. In a bid to smooth their path, diplomats said the governor of the Bank of England, Mr Mervyn King, could be named as his deputy.
Mr Almunia alluded to a such a compromise so as to get Europe’s biggest financial centre to buy into the concept. Amid rows over the nitty-gritty, a diplomat said, “This text could give the commission too much power and has little chance of being approved as it is.”