EU Meets As US Reforms Banking

As the US pushes through a monumental bank reform Bill, Ireland's Minister for Finance is to attend a meeting of EU ministers today to discuss how Europe will reform its crippled banking system.

In the shadow of the Greek debt crisis, the European Commission wants to see more economic surveillance and budget discipline to protect the other 15 countries that use the single currency.

However, this could prove more difficult than first expected as the proposed plans for the EU to oversee governments' budgets before they are submitted to their individual parliaments is being seen as too intrusive and a threat to sovereignty by some member states.

Divisions have also been exposed by a German ban this week on the tactic of short-selling, which can artificially push down share prices, despite a vow by Berlin and Paris yesterday to work together on the euro zone crisis.

The European wrangling is taking place against the backdrop of one of the most significant curtailments to Wall Street's freedom since the 1930s.

The new finance bill, which is expected to have major consequences, is now on track to become law in the United States after the Obama administration overcame Republican opposition to secure a 60/40 victory in the Senate last night.

After weeks of political backroom discussions and bitter protesting and disquiet from the banking sector, the Democratic majority achieved enough support to overcome a threatened Republican filibuster to the new bill intended to end the ability of mega corporations holding the Government to ransom.

One of the major aspects of the Bill will stop the emergence of "too big to fail" banks, by creating a process capable of liquidation for failing financial institutions.

Other measures contained within the US package include the creation of a consumer protection agency intended to guard against predatory business tactics and greater transparency in derivatives trading and boardroom bonuses.

Speaking last night, American President Barack Obama said the vote was a victory over hefty Wall Street tactics to block the bill: "Over the past year, the financial industry has repeatedly tried to end this reform with hoards of lobbyists and millions of dollars of ads. When they couldn't kill it, they tried to water it down."

The President said the law would mean an end to state-funded rescues: "Taxpayers will never again be asked to foot the bill for Wall Street's mistakes. There will be no more taxpayer-funded bailouts. Period."

(DW/BMcc)