EU aims to resist Obama banks plan
Published 16/02/2010 | 10:12
EU FINANCE ministers are uniting to oppose US President Barack Obama’s proposal to limit banks’ size and risk-taking, saying his plan may run counter to EU policy, according to a draft document.
Their position, which they will ratify at today’s meeting, comes after Mr Obama last month urged the adoption of the so-called ‘Volcker rule’, which was named after former Federal Reserve Chairman Paul Volcker.
The plan would bar commercial banks from owning hedge funds and also limit how much they can trade for their own account.
The finance ministers gathering in Brussels will express “their concern that the application of the ‘Volcker’ rule in the EU may not be consistent with the current principles of the internal market and universal banking”, the draft document states, adding that “any policy choice should avoid pushing risks to other parts of the financial system”.
The resistance underscores political divisions over how to overhaul banking regulations to prevent a repeat of the crisis that forced taxpayers to prop up the financial system.
While leaders have called for a Group of 20 initiative, the US, Britain, and France are forging their own policies to limit compensation and risks.
The draft document was prepared by a committee of officials from finance ministries, the European Central Bank and the European Commission.
The three-page memo also considered proposals, including levying a stability fee on banks and creating national or pan-European funds for future bailouts. (Bloomberg)