Thanks to WhistleblowerIrl for pointing out to me this FT front page from Friday.
The EU Commission is pushing hard for centralised control of all EU banks, large and small, that would take decisions about bailing out, restructuring or closing down banks out of the hands of National Governments.
Germany is demanding central control, but only of larger banks - as there are small local savings banks in Germany that are very strongly politically connected.
The EU Commission and the ECB, which takes the German line, are in conflict over this.
Many of the (exposed) bank insolvencies of the last five years have taken place in smaller instititutions in Ireland, Spain and elsewhere.
The FT suggests that the banking union would involve rescue of banks "like Spain and Ireland's" directly by the ECB, rather than at national level, from the 500 bn rescue fund.
Of course, in reality there is no intention of back-dating this arrangement - Ireland would be stuck with its debt, along with the insanely unrealistic requirements for rapid debt reduction, for which we voted recently.
In any event, 500 billion is a drop in the ocean, in terms of the gaps in the EU banks.
This summer, as predicted, has not been an idle one in Europe. All kinds of "ready to go" measures will be sprung on us this month, to take advantage of the inevitable return to the cliff edge of the financial crisis, accelerated by bond repayments and market pressures.
The European Central Bank would be given sweeping authority over all 6,000 eurozone banks under a plan being drawn up by the European Commission, putting Brussels on a collision course with Germany and the ECB itself, which have urged a more decentralised first step towards “banking union”.
The plan, agreed at a meeting this week between top aides to José Manuel Barroso, commission president, and Michel Barnier, the EU’s senior financial regulator, would strip existing national supervisors of almost all authority to shut down or restructure their countries’ failing banks, giving those powers to Frankfurt.Under the proposal, ultimate authority would pass to a new ECB “supervisory board” separate from the ECB’s existing governing council. Although its make-up is still being debated, the leading plan would create a 23-member board: a national representative from each eurozone country plus six independent members, including its chair and vice-chair.