Key European Union lawmakers say a planned euro-area system for handling failing lenders should have access to public money until a common resolution fund is filled by levies on the banking industry.
EU lawmaker Elisa Ferreira, who’s in charge of guiding the European Commission’s plan for a Single Resolution Mechanism through parliament, proposed the backstop as one of a raft of draft amendments to the bill. Loans would later be repaid by the fund, according to the text of the amendment on the EU’s website.
The bank-failure plan is part of a euro-area effort to break the financial links between sovereigns and banks by centralizing oversight and crisis management of failing lenders. The blueprint, presented in July by Michel Barnier, the EU’s financial-services chief, has met with a barrage of complaints from governments.
Barnier’s proposal includes a central fund equivalent to 1 percent of government-insured deposits held by euro-area banks. The commission has estimated the size of the fund, to be financed by levies on banks, at 55 billion euros ($74 billion).
Ferreira, a socialist, has said the “public loan facility” is needed to protect the SRM’s “credibility” during the 10 years it will take to fill the common fund. Her proposal, or variations on it, has won support from center-right lawmakers such as Jean-Paul Gauzes and Pablo Zalba Bidegain, as well as Sylvie Goulard, a liberal.
“Especially as long as the Single Resolution Fund is not entirely funded, it is essential to establish a European public loan facility,” Gauzes said in one of his proposed amendments. Any loan from the facility should be reimbursed from the bank-financed fund “within an agreed timeframe.”
Other requests include a bid by Auke Zijlstra, an EU lawmaker from the anti-euro Dutch Freedom Party, to have Barnier’s entire plan scrapped on grounds of illegality.
“The proposal infringes upon national budgetary sovereignty, therefore it would require a treaty change in order for it to be legally submitted,” according to one of Zijlstra’s amendments.
Geert Wilders, the Dutch Freedom Party leader, is at the nexus of a number of anti-Europe, anti-immigrant parties that polls indicate are poised to do well in EU parliament elections in May next year.
“The European Parliament could be composed in large part of anti-Europeans next May,” French President Francois Hollande said in an interview published in the Belgian newspaper Le Soir last month.
‘Risk of Paralysis’
“This would be a step back and would create the risk of paralysis.”
The idea of scrapping Barnier’s entire plan is also backed by Bastiaan Belder, a Dutch lawmaker for the Reform Protestants party, or SGP. Belder is head of the central committee of the EU Parliament’s Europe of Freedom and Democracy Group, which also includes the U.K. Independence Party.
Parliament prepares its negotiating positions on draft laws by nominating a lead member for each file, who suggests draft changes to the commission’s proposal. Other committee members can put forward their own draft amendments, after which the parliament’s political groups seek to negotiate compromises before putting the matter to a vote.
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