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Little restructuring of too-big-tofail banks by the European Parliament and Council of Ministers

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On 22 December 2014, Gunnar Hökmark, the European Parliament’s rapporteur for the EU’s reform to restructure too-big-to-fail banks, released his draft report(opens in new window) . The report will amend the Commission’s proposal. The Parliament’s responsible committee (ECON) will vote on the report on 23 March 2015 and a plenary vote is indicated for 28 April.

According to Finance Watch(opens in new window) , the Hökmark amendments would prevent separation between basic banking and speculative banking activities because they would “make bank structure reform ineffective” and “substantially weaken the objectives, scope, definitions, mechanism and sanctions in the Commission’s original proposal.”

The amendments would have the following effects, amongst others:

The ECON committee is under heavy pressure from the financial lobby. Therefore, the Hökmark draft raises concern that the committee will buckle under this pressure. The parallel deliberations at the Council of Finance Ministers might weaken the proposed law further, as different governments have openly voiced opposition to the further restructuring of banks. The entire law is even at risk of being withdrawn.

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