Analysis: Europe's half-hearted bid to protect its banks
By John O'Donnell
BRUSSELS (Reuters) - Europe's efforts to form a united front behind euro zone banks are reaching a climax, but many fear they will fail to restore confidence and prove flimsy should another crisis strike.
After more than a year of talks, ministers from across the European Union agreed early on Thursday a scheme to close failing banks, but the process will be complex and politicized. They also stopped short of an ambitious plan for euro zone countries to help each other in tackling problem lenders.
An agency and fund to wind down bad banks, working in tandem with the European Central Bank as the new watchdog, is an important step towards banking union, but the loose ends could lead to the complete unraveling of the project.
Although hailed as a "historic" moment by France's Finance Minister Pierre Moscovici, many who emerged from the meeting into the Brussels rain were disappointed by the result.
"It's really a farce," said one senior official involved, who asked not to be named. "We're patting other on the shoulder and congratulating each other, but really what has been achieved is a far cry from what was needed."
After the agreement among countries, talks now begin with the European Parliament to finalize the law.
With no immediate banking crisis in sight, the new structure is likely to go untested for now, but it could buckle if one were to happen.
Furthermore, promises to pool euro zone resources to deal with bad banks are so distant - only after 10 years if at all - that they will do little to shore up confidence. Continued...