THREE European supervisory authorities covering banking, stock markets and insurance should ensure such financial institutions can no longer gamble at the taxpayers’ expense, according to the European Parliament that voted through the reforms.
Irish MEPs welcomed the bodies due to be operating by January, saying it should protect citizens in the future from events like the collapse of Equitable Life and the debacle of Anglo Irish Bank.
It took about 18 months battling between the EU’s institutions and the member states to finally agree the powers of the new bodies as Britain battled to protect the City of London from Brussels control and the parliament wanted to tighten controls as much as possible.
The final deal sees national supervisors in control of what happens in their country but with the European authorities having wide powers to impose decisions directly on financial institutions including banks if the national regulator fails to act and uphold EU legislation.
The FSA to supervise banks will be based in London, that for insurance and pensions will be in Frankfurt while securities and markets will be in Paris.
They will also drive coordination within the colleges of national supervisors set up to watch over cross-border financial institutions. They will be able to impose legally-binding mediation in the event of disputes between national supervisors, and to impose supervisory decision on a financial institution.
Pat “the Cope” Gallagher said: “The new European Systemic Risk Board is a significant step forward in identifying risks within financial institutions.”
The commission, the supervisory authority, the risk board and the parliament can ask the council of member states to declare an emergency if a situation warrants it.
Fine Gael’s Jim Higgins said: “The new rules will mean that private financial companies will not be allowed to mortgage our children’s futures as they have in the current crisis.
“The cause of the current mess in our economy is due to weak and virtually non-existent Government regulation. I welcome this watchdog which means that the Government will not be left to its own devices when it comes to monitoring the lending practices of banks.”
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