The first outline of Europe?s bank recapitalization plan is now public: clear up doubts about its solvency, make sure credit restrictions do not get tighter and prevent a relapse of recession that would drag down the global economy.
Yesterday the US met before European parliament with European Commission president and Portuguese conservative, José Manuel Barroso. The hottest issue between bankers and shareholders is that bankers cannot pay out bonuses or dividends until their banks are amply capitalized. EU leaders want to gain consensus from the public and avoid a veto that would lead to future aid packages that would weigh on taxpayers.
According to sources consulted by elEconomista, the first point is an aid package for the savings banks. The Comunicación de Bruselas proposes that the recapitalization plan "covers all the banks with potential systemic risk, excluding small domestic banks with no international activity."
Public Debt
The second point asks that sector supervisor put banks through more solvency tests now that they are displaying their systemic risk with more transparency. Tests would apply just as much to treasury bonds to near-term (or 'trading book')funds, such as those entered in their sales portfolios or 'banking books.'
