Once nannycrats grab on to an idea, they never relinquish it. Eurobonds are the perfect example. Many other ideas float around despite numerous objections in key places. Some of these ideas involve creation of more commissions and more working groups.
Here is a sampling of commissions and groups that I am aware of.
- The European Commission is headed by president José Manuel Barroso
- The European Council is headed by president Herman Van Rompuy
- The Euro Group is headed by president Jean-Claude Juncker
- The European parliament president is Martin Schulz
- Numerous other committees set policy on trade, energy, and nearly everything else under the sun.
Barroso now wants another new commission, this one under the ECB with the task of being the “all powerful” banking supervisor.
As envisioned, Barroso’s plan would create a 23-member board: a national representative from each eurozone country plus six independent members, including its chair and vice-chair.
No doubt there will be dozens if not hundreds of staff members all intent on expanding their own power.
The Financial Times has more details in Brussels pushes for wide ECB powers
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.
The German government has resisted centralising all supervisory powers with the ECB, however, arguing that Frankfurt should be left to deal with just the eurozone’s 20-25 largest banks. National supervisors would then be left as independent and co-ordinating agencies for smaller banks.
Some senior ECB officials had taken a similar view in closed-door consultations with Brussels, EU officials said, though Mario Draghi, the ECB chief, is more sympathetic to the commission’s view.
Germany’s objections also stem from a desire to keep national control over smaller, politically connected regional savings banks.
Despite the resistance, Mr Barroso this week decided to adopt the more ambitious proposal advocated by the commission’s internal market directorate, drafters of the plan, which argued a narrower approach would disappoint financial markets.
Splitting responsibility could complicate the next steps in creating a banking union: setting up a eurozone-wide deposit guarantee scheme and bank bailout fund. If only large banks were covered by those schemes, depositors could flee smaller banks for more secure larger ones, officials argued.
To become law, all 27 nations must agree. Barroso hopes for a summit before the end of the year.
In addition to unanimous approval for such a position, I would point out that ceding power to Brussels is a change so sweeping that Germany would require a national referendum, just as with the eurobonds idea.
Nannycrats do not care about such issues, they just plow ahead, then blame Germany when it will not go along.
Speaking of which, I highly suspect Merkel has taken a partial stance out of political expediency. Perhaps she thinks she can avoid a referendum by limiting authority to only the largest banks.
Mike “Mish” Shedlock
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