In June, an EU commission put forth a banking resolution proposal giving itself powers in which the ability to shut down banks would be centralised in the European Commission.
Brussels would have the clout to overrule the bank’s home country and use funds from a central pot.
Specifically, the commission proposed the resolution authority to “be equipped with a single bank resolution fund”. The fund would have the power to borrow from markets, using the “assets of euro area banks” as a guarantee and backstop.
Nazi Enabling Acts
The proposal was presented on Tuesday by Michel Barnier, EU commissioner for internal market and services, and immediately went up in flames when German politicians likened Brussels bank powers to Nazi ‘enabling acts’.
The head of a Bavarian banking association compared the European Commission’s plan to grant itself the final say on winding up troubled banks to the type of law that allowed the Nazis to seize power.
The comments by Stephan Götzl, head of the GVB, the Bavarian association of co-operative banks, underscore the depth of German opposition to the plans presented on Tuesday by Michel Barnier, EU commissioner for internal market and services.
“We in Germany have had a bad experience with enabling acts,” he said, appearing to refer to the 1933 constitutional amendment that handed the Nazis sweeping powers to enact legislation, unchecked by parliament.
The remarks were first reported by the Wall Street Journal and confirmed later by a spokesman. The spokesman noted Mr Götzl had not specifically mentioned Hitler or the Nazis.
“In our view, this proposal gives the commission powers it does not possess according to current [EU] treaties,” chancellor Angela Merkel’s spokesman said on Tuesday
Wolfgang Schäuble, Ms Merkel’s finance minister, also warned Brussels to respect the limits of the law or “risk major turbulence”.
A spokesperson for Mr Barnier declined to respond to Mr Götzl’s comments.
Mr Barnier is confident the proposed measures are legally sound and cites support from lawyers at the commission, the European council and European Central Bank. Officials say they reluctantly proposed powers for the commission, rather than a separate agency, and did so only because it was the most legally solid and effective institution to handle bank crises under existing EU treaties.
Mr Barnier contends Europe cannot afford to wait for treaty change, which is typically an arduous process that can take years. Brussels wants the resolution regime, commanding some 300 staff, to begin from January 2015.
Reflections on What Germany and the UK Can Expect
The EU will stop at nothing to give itself sweeping powers to do whatever the hell it wants including the creation of monetary transfer mechanisms that are absolutely against the German constitution.
In case this was not obvious before (it should have been), it is certainly obvious now.
Note the excuse by Mr Barnier “Europe cannot afford to wait for treaty change”. In other words, to hell with legalities and treaties.
This is such a dangerous, slippery slope that even Merkel and Schäuble commented on it.
What About the UK?
The same applies to the UK in a broader sense (in regards to the EU as opposed to the eurozone).
The only solution is for Germany to say it has had enough of the transfer proposals and to exit the European Monetary Union (EMU). For identical reasons, the UK should exit the EU.
Mike “Mish” Shedlock