April 18, 2021

Europe’s Finance Ministers Start Negotiating Guidelines on Failing Banks

LUXEMBOURG — European Union finance ministers on Thursday began to negotiate rules for rescuing or closing failing banks, regulations considered crucial to promoting financial stability in the region.

But the two-day meeting could be overshadowed by renewed concerns in Greece, where the crisis began. On Thursday, the International Monetary Fund and euro zone officials issued a thinly veiled warning that it could suspend aid to Greece by the end of July if the political turbulence prevented monitors from completing their review of the country’s finances. Olli Rehn, the European commissioner for economic and monetary affairs, expressed frustration that Greece was again undermining efforts in Europe to turn the page on its five-year crisis.

“I love Greece but I’m very much looking forward to a Eurogroup news conference where Greece is not going to be discussed and a summer where we don’t have any Greek crisis,” Mr. Rehn said at a news conference.

The urgency for transformative measures has largely ebbed since the European Central Bank calmed the markets by promising to buy bonds from troubled euro zone countries. But the surge of concerns about Greece underscored the need for the European finance ministers to secure deals — however modest — during the marathon negotiating session in Luxembourg.

A so-called banking union could help prevent a recurrence of the chaos that ensued during a bailout for Cyprus in March, when governments and international lenders argued over how to impose losses on investors in the country’s troubled banks. Such policies could also prove vital if banks reveal new vulnerabilities during the next round of so-called stress tests, which will most likely happen next year.

The goal of the ministers’ talks was to develop policies that “finally close the vicious circle between the banking crises and sovereign crises” and to “definitively put behind us the financial crisis that has weighed on Europe since 2008,” said Pierre Moscovici, the French finance minister.

The meetings could also allow the leaders of the Union’s 27 member states to endorse reform efforts ahead of their meeting next week in Brussels, their last scheduled session before the summer. Still, the meetings are likely to result in incremental steps, rather than transformative ones like creating a lender of last resort to guarantee government or bank debt. The meeting of the 17 ministers from the euro zone, called the Eurogroup, focused on determining the conditions under which countries could draw on a shared bailout fund to inject money directly into troubled banks.

Even though European Union leaders agreed to push forward that initiative a year ago, the ministers confirmed on Thursday night that this tool will not be available until the European Central Bank takes over the supervision of some of the bloc’s largest banks in the second half of 2014. But ministers agreed that up to 60 billion euros, or about $80 billion, could be drawn from the fund to rescue banks whose failure could have broad impact on the financial system.

The ministers also left open the possibility of recapitalizing banks that are already in trouble. “The potential retroactive application of the instrument will be decided on a case-by-case basis,” Jeroen Dijsselbloem, the president of the Eurogroup, said at a news conference.

That option is important for Ireland, which invested more than 30 billion euros, or about $40 billion, to rescue its banks during the crisis. The country is lobbying to use the bailout fund, called the European Stability Mechanism, to recapitalize the banks and relieve its debt.

“We’ve always argued that Ireland was an exceptional case,” Michael Noonan, the Irish finance minister, said at the meeting earlier on Thursday. “We’re not arguing this case for all our colleagues in the euro zone.”

The ministers decided to oblige countries to contribute 20 percent of any capital increase as a way to encourage governments to prevent mismanagement or losses at banks, a demand made by countries like Germany. When the meetings continue Friday, the finance ministers from all countries in the European Union will try to hash out a plan for shutting down troubled banks.

A central issue is the rules for imposing losses on a bank’s creditors, rather than putting the burden on taxpayers. Some countries, including Britain, are pushing to ensure that governments retain some flexibility. The worry is that automatic losses for some creditors could set off fears of losses at other institutions, which could start bank runs.

But for some countries, like Spain, where government finances are under severe strain, having a single rule book has become an important competitive consideration. Spain wants to ensure that bank investors do not flee to more prosperous countries like Germany, where mechanisms for resolving bank problems might be better capitalized and could be used to shield creditors from losses.

Article source: http://www.nytimes.com/2013/06/21/business/global/europes-finance-ministers-start-negotiating-guidelines-on-failing-banks.html?partner=rss&emc=rss

Bucks Blog: Getting Your Will and Estate Plans Together

In this weekend’s Your Money column, I pay a visit to Chanel Reynolds, a widow who has built a site whose name cannot be mentioned here (though I can give you a link to it). It encourages you to get your will, living will and power of attorney done. And it urges you to collect all of your financial and other account information in one place and let a few trusted people know where to find it.

Ms. Reynolds hadn’t done much of this before her husband died in a bicycling accident in 2009, and she lost dozens of hours in the months afterward reconstructing her financial life. Her site urges you to avoid making the mistakes she did and helps you get started.

So, confession time. I have much of this together (though my wife and I had not finished it by the time our daughter was born in 2005). Still, I’m not perfect, and I imagine that most of you aren’t either. Our files are well organized, but there is no one else who knows how to access everything in my absence or has a complete list of accounts. This is going to change, pronto, and I have Ms. Reynolds to thank. It’s the raw, naked urgency of her story that gave me the kick that I needed.

How far along are you in getting your act together? And if you’ve learned the hard way how badly things can go when people don’t have their affairs in order, what advice would you offer to others who are just now sorting their own?

Article source: http://bucks.blogs.nytimes.com/2013/01/11/getting-your-will-and-estate-plans-together/?partner=rss&emc=rss