Europeans trying to complete deal on bad banks
BRUSSELS (AP) -- European finance ministers are taking another crack at an issue that's bedeviled them: how to handle failing banks at an EU level.
At a meeting in Brussels, German Finance Minister Wolfgang Schaeuble said Monday that he's "optimistic" a deal on creating a new European Union agency to deal with bad banks can be reached this month.
"There is a lot of work to do," he said. "I don't know if we will do it in one meeting or if we will need an additional meeting."
EU leaders are under pressure to arrive at a compromise on the banking agency by the end of the year so it can be enacted by the current European Parliament. The issue is expected to dominate Tuesday's meeting of finance ministers from all 28 EU member countries. On Monday, ministers from the 17 nations using the euro currency met.
One sticking point preventing agreement has been Germany's opposition to letting the EU's executive arm be the decision maker on whether to close or restructure a bank. Schaeuble didn't say Monday if Germany is ready to drop its opposition, but said "there are solutions" to the issue.
Another point of contention has been who should pay if a troubled bank needs taxpayer funds so that its failure does not hurt the overall economy. First in line to take losses should be bank shareholders, and a troubled bank could also be sold to new owners. If more money is needed, the proposed Europe-wide agency would have a rescue fund financed through a levy on banks.
The idea is to have the fund at the EU level, and spread bailout costs throughout European banks so that the failure of one financial institution doesn't wipe out a country's finances - and also so banks, and not taxpayers, pay the bill. Germany has said such an arrangement would require a change in the basic EU treaty, which could take years. It proposes instead a network of national financial safety nets until the treaty can be amended.
McHugh reported from Frankfurt, Germany.