The Ecofin Council creates officially the clan of ‘undead’ banks

From left to right, Jean-Jean-Claude Juncker, Prime Minister and Minister of Economics of Luxembourg, Ollie Rehn vice President of EC, Christine Lagarde general manager of IMF. (EC Audiovisual Services).

From left to right, Jean-Claude Juncker, Prime Minister and Minister of Economics of Luxembourg, Ollie Rehn vice President of EC, Christine Lagarde general manager of IMF. (EC Audiovisual Services).

Today 5 March 2013, in Brussels, without much publicity the Economic and Financial Affairs Council of the European Union, known as the Ecofin Council, is expected to discuss, inter alia, the new draft rules on bank capital requirements (“CRD 4”), including future rules on bankers’ bonuses. Those issues go in pair, in a way that was not all explained in terms that could be understood by the wider public. The mighty publicity machines of the EU institutions promoted the one, about capping bankers’ bonuses, which is easily sellable to the unsuspecting public, to hide the other about the creation of the ‘undead’ banks.

This last and more important issue is about a number of largely privately owned Eurozone banks, which are to be elevated legally to the ‘undead’ status. The Ecofin will presently create the categories of systemically important financial institutions (SIFIs), global systemically important institutions (G-SIIs) and the EU or domestic systemically important institutions (O-SIIs). As it usually happens in cases like that, the initial idea to elevate some banks to the category of “cine qua non” needs elaboration. It is like in heaven where there are many categories or regiments of Cherubims, Seraphims etc.  It couldn’t be differently because not all banks are equal. How can the giant Deutsche Bank be equal to a Cypriot or a Portuguese lender? There have to be distinctions in this new heavenly universe of banks.

New banking universe

In short the Ecofin Council today is about to create another layer of gentry within the establishment. This one will be made up of by bankers and bank owners, who will be living from now to eternity on the sweat of ordinary people. It will be exactly in the same manner as some national and the European bureaucracies have become “systemic”, thus ‘undead’.

In detail, according to an EU Council background announcement, the Ecofin, {will be called on to broadly endorse a compromise reached with the European Parliament on 27 February on two proposals – the so-called “CRD 4” package – amending the EU’s rules on capital requirements for banks and investment firms. The latest round of negotiations between Council and Parliament focused on five issues:

– Requirements for national systemic risk buffers and buffers for systemically important financial institutions (SIFIs);

– Flexibility for member states to impose stricter national measures to address increased macro-prudential risks to financial stability;

– Reporting requirements for banks on a country-by-country basis;

– Restrictions on bankers’ bonuses;

– Additional own-initiative mediation powers for the European Banking Authority (EBA)}.

There is more explanation of how the banks will be categorised in first, second or third rate systemic (or rather untouchable?) ones. Exactly as the EU bureaucracy is structured and functions, primarily serving its own interests and causes. The text the Ecofin Council is about to endorse continues like that:

{The main elements of the compromise with the Parliament are as follows:

1. SIFI buffers and systemic risk buffer

The buffer requirements specific to systemic institutions will be mandatory for global systemically important institutions (G-SIIs), but voluntary for other (i.e. EU or domestic) systemically important institutions (O-SIIs). Buffers will apply on a consolidated basis for G-SIIs and on an individual, sub-consolidated or consolidated basis for O-SIIs. The O-SII buffer is capped at 2%. The systemic risk buffer and buffers for G-SIIs and O-SIIs will generally not be cumulative and only the highest of the three buffers will apply. However, if the systemic risk buffer only applies to domestic exposures, it can be added to the SIFI buffer}.

In all those texts it is not yet clear who is going to pay for those buffers to safeguard the banks in the difficult times. It is certain however that the cost to crate them will be borne by the people who sweat in the real economy. In short the European Union is about to create a new category of “systemic” financial institutions, which will continue to produce financial crisis. Whenever those ‘undead’ banks are going bankrupt, the buffers will intervene and restore their capital to previous levels. Exactly as Count Dracula sucks the blood of the living, to perpetuate his own existence.

And all that under the publicity coverage of the EU institutions, which promoted the capping of bankers’ bonuses, to hide the creation of a new banking universe of ‘undead’ firms.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

This is why AI has a gender problem

Mental health and suicide prevention-what can be done to increase access to mental health services in my region?

European Commission adopts new list of third countries with weak anti-money laundering and terrorist financing regimes

New rules make household appliances more sustainable

‘Disaster resilient’ farming reduces agriculture risks, yields economic gains, says new UN agriculture agency report

Draghi: Germany has to spend if Eurozone is to exit recession

How digital is your country? Europe needs Digital Single Market to boost its digital performance

Scientists can lead the fight against fake news

Syria: Urgent, concrete actions needed, to protect children too young to ‘make sense of this senseless war’

Guatemala Dos Erres massacre conviction welcomed by UN human rights office

New EU rules cut red tape for citizens living or working in another Member State as of tomorrow

The EU tells the bare truth to the UK that there is no such thing as easy divorces

Basel III rules relaxed: Banks got it all but become more prone to crisis

Mergers: Commission clears Telia’s acquisition of Bonnier Broadcasting, subject to conditions

Security Council calls for dialogue in Haiti

How UN cultural treasures helped set the stage for Game of Thrones

UN chief extends condolences to families of China landslide casualties

Ahead of street protests, UN rights chief urges Guatemalan Government to respect democratic freedoms

Monday’s Daily Brief: the future of food and digital tech, labour justice in focus, denuclearization, and Kosovo

Sacrifice of fallen ‘blue helmet’ to be honoured with UN’s highest peacekeeping award

Turkish and Greek Cypriot leaders ready for talks with UN chief on improved relations

SMEs and micro firms sinking together with south Eurozone

Climate change is a security threat. We must act now

These social entrepreneurs are lighting up Africa

Can the Notre-Dame fire freeze the ‘Yellow Vests’ uprising?

On Kristallnacht anniversary, UN chief urges renewed fight against ‘crime’ of anti-Semitism

The Mobile World Congress in Shanghai will take place on 27-29 June 2018

Huawei answers allegations about its selling prices

Your next pair of sneakers could be made from coffee

6 things to know about press freedom around the world

How energy infrastructure is shaping geopolitics in East Asia

European Union supports survivors of sexual violence in conflict

Why youth unemployment is so difficult to counter

On the first day of 2019, over 395,000 babies to be born worldwide: UNICEF

In polarized America, a new divide looms

One migrant child reported dead or missing every day, UN calls for more protection

Despite falling attacks, ISIL terrorists remain ‘global threat’: UN report

Greece bailout ends but with no substantial effect on citizens’ life

Have central banks missed the exit train?

More women than ever before are running for political office in the US

Higher education becoming again a privilege of the wealthy?

Guterres says UN stands ready to support Brazil’s search and rescue effort in wake of tragic dam collapse

These countries have some of the highest voter turnout in the world

Bolivia crisis: UN chief sends envoy to support peace, amidst renewed clashes

These are the world’s best countries to retire in, as of 2019

Can the EU afford a trade war with China?

Long-term exposure to air pollution is like smoking a pack of cigarettes a day

Europe’s top court hears Intel and sends € 1.06 bn antitrust fine to review

UN chemical weapons watchdog adds new powers to assign blame, following attacks

What the Fifth Industrial Revolution is and why it matters

EU Leaders’ meeting in Sofia: Completing a trusted Digital Single Market for the benefit of all

South Korea once recycled 2% of its food waste. Now it recycles 95%

G7: A serious setback hardly avoided in iconic Biarritz

“Cyber security is a shared responsibility: stop, think, connect”, a Sting Exclusive by EU Commissioner Gabriel

In 2020 Asia will have the world’s largest GDP. Here’s what that means

DiscoverEU: 15,000 travel passes up for grabs to explore the EU this summer

Does the West reserve the fate of Libya and Syria for others? How does this relate to the EU’s Neighborhood Policy?

The Sting’s Values

Companies ‘failing’ to address offline harm incited by online hate: UN expert

Humanitarian crisis in Yemen remains the worst in the world, warns UN

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s