BRUSSELS (AP) — European finance ministers on Wednesday sought a deal that would crown their lengthy efforts to handle failing banks in a way that doesn't jeopardize the stability of the eurozone as a whole.
The issues debated at the emergency meeting were highly technical, but a solution would finalize the framework for the so-called banking union, the biggest step to integrate Europe's economy since the launching of the common euro currency now used by 17 countries.
The talks in Brussels marked the ministers' second meeting in as many weeks as they tried to agree on the legislation before year's end to ensure the European Parliament can pass the laws before the end of its term in May.
Failure to reach an agreement on time could mean delaying the banking union as a whole, jeopardizing Europe's key project to stabilize its financial sector and protect national governments from being dragged down by failing banks.
One of the reasons why Europe got into such financial trouble was that governments like Ireland had to step in to save their banks when the financial crisis first exploded in 2007-8, eventually forcing the governments into seeking a bailout themselves.
European Commission President Jose Manuel Barroso urged ministers to reach a deal by day's end. "It's feasible with a bit of festive spirit," Barroso said in a tweet.
Minister Pierre Moscovici of France, the eurozone's second-largest economy, voiced confidence that "a very good agreement" on the technical details would be reached.
"I don't see today a major problem that could be an obstacle," he told reporters on the sidelines of the meeting. "But as always, the devil lies in the details. So we're fighting against the devil, finalizing the details."
The ministers aimed at reaching agreement before a summit of EU leaders begins Thursday in Brussels.
In a first major step, ministers agreed earlier this year to centralize the oversight for the eurozone's biggest banks. The latest meeting of the EU's 28 finance ministers was over the fine print of the proposed agency that will deal with failing banks in the euro-using countries and execute the centralized banking supervisor's decisions.
A preparatory meeting of the eurozone's 17 finance ministers late Tuesday reached an initial agreement on how to finance the rescue agency for insolvent banks. It foresees that banks will have to provide 55 billion euros ($76 billion) over 10 years to pay for shutting down or spinning off ailing financial institutions.
Until the full amount of money will be available, governments are supposed to be mostly responsible for their own country's banks, for instance by making them pay into a national fund. In the event a country doesn't have adequate resources, it could borrow from the permanent eurozone rescue fund, the 500-billion euro European Stability Mechanism.
Banks also will have to keep paying into the shared fund until all of the bills for closing, or disposing, of a sick bank are paid.
The policy's goal is to shield taxpayers from having to foot the bill for future bank bailouts.
Olli Rehn, the EU's top economic official, said eurozone ministers' agreement represents a "crucial breakthrough" for the planned banking union.
But Zsolt Darvas, a senior fellow at Brussels-based economic think tank Bruegel, cautioned there are major problems with the regulatory blueprint. He said the plan for the transitional period still doesn't do enough to break the "doom loop" between insolvent banks and national governments that led to economic havoc in Spain and Ireland.
"The glass is half-empty," he said.
Analysts also warn that even when the pot of 55 billion euros will be filled, it won't be enough to deal with a severe banking crisis, like the 2007-8 one, that affects several countries.
To reach a final agreement, the finance ministers must resolve other issues, including which powers the EU's executive and national governments should have in deciding how to deal with failing banks. Ministers also need to decide on the legal framework for the rescue plan and backstop fund, which will likely require an intergovernmental treaty.
The EU commissioner in charge of financial reform, Michel Barnier, warned the result could be too clunky and slow to work effectively.
"Decision-making within the single resolution mechanism is still too complex with a consultation system which slows down the process unnecessarily," he said. "What we are building is a single system and not a multistory intergovernmental network."
The ministers' decision will still have to be approved by the European Parliament and EU member states to become law.
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