Banking Union or Bank Dictatorship?

Eurozone taxpayers should stop bailing out banks with their money, said ECB chairman Mario Draghi in Brussels on May 31. National supervisors have not been able to see problems coming, such as Bankia, until it was late, and the bill to be footed with public money has become expensive, he noted. From now
on, things will change.

There will be a “Banking Union”, i.e. Eurozone banks will all come together under one single, EU supervision. A single European Deposit Insurance Fund will be established to protect savings. A single European regime will be established to eventually liquidate (“resolve”) banks. EU Commission President José Manuel Barroso, European Council President Herman Van Rompuy and former Deutsche Bank head Josef Ackermann prominently backed the scheme.

Then, on June 6, EU Internal Market Commissioner Michel Barnier laid out his plan for the Banking Union, basically detailing the three “pillars” already described by Draghi. Has the EU fi nally decided to go against speculators? Is it fi nally going on to clean out the trash, shut down the fi nancial casino
and make the banking system functional for productive credit?

Has the EU been converted to general welfare institution?

Not at all.

The EU is again to steal public monies. A banking union will not protect citizens’ savings. On the contrary, by taking those savings away from national protection and national law, it will put them into that arbitrary realm called “EU Law”, where the only sure thing is that nothing is sure.

This means that national governments will lose whatever power they might have or wish to have over the respective national banking systems, which will be put in one pot, where the already unpayable debt will keep growing faster than any Monopoly money the ECB might print to repay it.

The European Banking Union is an act of preemptive war against the growing push for the real step that could “resolve” the bankrupt system: banking separation or a “Glass-Steagall” reform. Separating deposit banks from investment banks is the only way to guarantee that savings deposits will not be lost
when speculators go broke, or used to pay the latter’s losses. But the Banking Union is a thinly veiled attempt to stretch a safety net under the insolvent Spanish banking system, using saving deposits of other Euroland members, and especially Germany. If, as it seems from what Barnier illustrated, the Deposits Guarantee Fund is entirely sponsored by the banks, and not by the government as in the case of the American FDIC, it is deposits against deposits.

Again, Eurocrats think that they can contain a crisis by isolating, thus demonstrating their utter incompetence. They must be stopped before it is too late.

E.I.R. STRATEGIC ALERT
www.eir.de