EU Lawmakers Fail to Revive Risky Bank Split Law Draft

European Union lawmakers have failed in their latest attempt to revive a draft law giving regulators powers to split up risky banks in order to prevent a repeat of the costly taxpayer bail-outs during the financial crisis.

A two-year stalemate between the European Parliament’s center left and center right has so far played into the hands of the region’s banks who want the 2014 proposal scrapped, arguing that other post-crisis rules already tackle the issues.

Centre right parties are against automatically splitting up banks if risky trading passes a set threshold, while the center left is against giving supervisors too much discretion under what is known as the bank structural reform (BSR).

This impasse is despite EU states, who have joint say on the draft law, having agreed a position ahead of final negotiations.

Lawmakers responsible for the measure and Valdis Dombrovskis, European Commission vice president and in charge of financial services, made no progress at a special meeting in Strasbourg on Tuesday night, following a year or so in limbo and an inconclusive committee vote.

“I think there will be a stalemate for quite some time,” said Gunnar Hoekmark, the Swedish center-right lawmaker who is steering the measure through parliament.

“Either the socialists accept our offer or we will still be where we are,” he said, adding that Dombrovskis gave no indication he would withdraw the stalled draft law.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza