Kenny proposes federal bailouts for 'systemically important' banks

Taoiseach Enda Kenny has today proposed a federal response by Europe to any future banking crisis.

Deputy Kenny was appearing before an Oireachtas Committee looking at next month's referendum on the EU Fiscal Treaty.

He said that some "very red herrings" have entered the debate, declaring that people and jobs are at the heart of the treaty, and not deficits and budgets.

The Taoiseach also took the opportunity to propose a federal response to deal with any future recapitalisation of banks.

"One possible solution is to federalise the response to the banking crisis in Europe with the ESM given the powers to recapitalise systemically important financial institutions directly," he said.

"I am not proposing a United States of Europe, but I am saying that we need new economic tools to give greater substance and credibility to our commitment to a true economic union."