No EU Agreement on Bank Bailouts

No EU Agreement on Bank Bailouts.

After 20 hours of talks last week EU finance ministers have failed to agree on a strategic plan to rescue banks that get into financial difficulty in the future. During the talks minister failed to agree on whether savers should have to deal with the cost of a bailout for the banks.

This issue will now have to be debated again in a meeting of the EU heads of government this week.

A deal needs to be agreed to get a plan for if banks hit another financial crisis and among the plans floating around rules for the order in which investors and creditors would have to pay for a bailout.

Our View

This is an issue of regulation.  A bank that gets itself into difficulty means it has been mis-managed by taking too big risks with investors money.  They need to be held to account.

"Too big to fail" is a phrase we have heard before and the only way we see to protect investors is to set aside investor funds in some form of trusts that banks cannot use for their own profit/gain.