Brussels unveils plan to protect taxpayers

Taxpayers should not have to cover the costs of failed banks, says the EU. Brussels has a plan to force banks themselves, creditors and shareholders to come to the rescue. The European Commission on Wednesday presented a draft plan to shelter taxpayers from the risk of again having to fork out billions for failing banks. It suggested a \"bail-in mechanism\" that would give national regulators the power to fire management, force losses on shareholders and creditors and even order the breakup and sale of a troubled bank. \"Our proposals protect European taxpayers from the financial consequences of banks going bust,\" Commission Chief Jose Manuel Barroso said in a statement. The ideas presented on Wednesday had been floated for quite some time, with EU Market Regulation Commissioner Michel Barnier first speaking of the need to make banks pay for their own crises back in 2010. Now that the banking crisis is deepening in Spain, opinion in Brussels has swung towards the merits of moving forwards on the issue. Step towards banking union \"We must equip public authorities so that they can deal adequately with future bank crises,\" Barnier commented. \"Otherwise citizens will once again be left to pay the bill, while the rescued banks continue as before, knowing that they will be bailed out again.\" According to statistics from Brussels, EU governments have already had to provide over 1.5 trillion euros ($1.9 trillion) to support their lenders since the start of the financial turmoil in late 2008. Rules forcing banks to pay into a so-called resolution fund - which is meant to pick up the bill for future bank failures - would, however, only apply as of 2018, the Commission said. This is to give banks time to raise the required extra capital.