Already in Greece, Spain and the Netherlands, the voters are rejecting austerity –
and once they start to link that austerity to eurozone membership, monetary union
will collapse quite quickly
Posted on 06/08/2012 2:18:59 PM PDT by bruinbirdman
The European Commission is threatening to use EU competition rules to close down the failing Greek, Spanish and Portuguese banks that have pushed the eurozone into a new crisis, with Greece's ATEbank the first in its sights.
Already in Greece, Spain and the Netherlands, the voters are rejecting austerity –
and once they start to link that austerity to eurozone membership, monetary union
will collapse quite quickly
EU state-aid rules, designed to stop government subsidies distorting competition, give the commission sweeping powers to impose restructuring conditions on bank bailouts or even to block the rescue.
Over the past two years, the rules have been interpreted generously to allow government bank bailouts to go ahead in return for commitments to restructure failing financial institutions but the mood in Brussels has hardened since the initial credit crunch of 2009.
”We are moving into a new phase with Greece, Portugal and Spain,” an EU official told Reuters. “Some banks are going to be squeezed. Some are going to be closed down.”
Commission officials are pressuring Greece to wind down failed banks, including its fifth-largest lender ATEbank, by threatening to refuse a bailout on competition grounds.
If the EU was to block an ATEbank rescue it would mark a policy shift and a more aggressive stance in tackling weak European banks at the centre of a dangerous new moment in the eurozone crisis.
”If you have a financial stability component, then you could be prepared to rescue a bank, but we are beyond that point now in a number of countries,” the official said. “ATEbank will have to be closed or wound down over time.”
ATEbank, the Greek central bank
(Excerpt) Read more at telegraph.co.uk ...
I have heard of this one. I think it is called the anti dog eat dog rule.
At first glance, the concept is sound. Let the banks fail. It’s the first step toward rebuilding a sound financial sector; and it’s what we should have done in 2008.
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