Wall Street Journal
January 6, 2011
The European Union is proposing an areawide framework for confronting bank and investment-firm failures that urges bondholders to share the burden.
The EU executive arm, the European Commission, Thursday released a 100-plus page consultation paper that aims to abolish the excuse that a bank is too big to fail. The paper, which is open to public comments until March 3, asks whether bank bondholders should share in paying for future bailouts and seeks to give greater authority to national regulators over bank leadership and business strategies when a country's economic stability is at risk.
The goal is for key bank services, such as withdrawing deposits and making payments, to remain unaffected in the process of winding down a bank and for the cost of that winding-down not to weigh on government budgets.
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