EU edges towards banking union, too late for Spain
By John O'Donnell
BRUSSELS (Reuters) - The European Commission proposed far-reaching powers for regulators to take control of failing banks on Wednesday, a step towards the banking union wanted by the European Central Bank, which will come too late to help Spain.
The plans, which spell out an insolvency regime for banks and empower regulators to intervene to prevent a collapse from triggering panic, first need to be approved by EU countries and the European Parliament and may not take effect until 2015.
This would be far too late for Spain, which could be forced to seek a bailout for its banks if it cannot support lenders saddled with bad property loans and other debt.
"The proposal we have today may be only useful for the future, but it does not solve the current problems we face," said Sharon Bowles, who chairs the European Parliament's economic and finance committee and is one of the most influential officials in shaping banking regulation in Brussels.
"In the short term we need further measures," she said.
The draft law is designed to prevent a repeat of the chaos after the fall of U.S. bank Lehman Brothers in 2008.
But Bowles criticized the delay in announcing the "long overdue" rules, which come almost five years after a collapse in U.S. subprime mortgages started a banking crisis in Europe.
"It's a shame we didn't have this years ago," said one banker, who declined to be identified. "It's not going to help Spain." Continued...