EU finance ministers pressed to fix oversight

[July 13, 2010]  BRUSSELS (AP) -- European Union finance ministers are under pressure at Monday talks to fix a compromise with EU lawmakers over new financial oversight agencies due to be set up at the end of the year.

Austrian Finance Minister Josef Proell told reporters "the decision time has come" despite some nations' reluctance to strike a deal on new European banking, insurance and market supervisors.

The European Parliament clashed with EU governments because it wants to give the new agencies more power to overrule national supervisors. It has delayed a key vote on the new oversight structure until the fall.

German Finance Minister Wolfgang Schaeuble said he was confident that "even if we don't reach a deal with the parliament today, then in the summer so that we have financial oversight on Jan. 1, which is the goal."

News agency DAPD reported him as saying that there are now fewer areas of conflict with the parliament after talks this week -- and Britain was also ready to participate in striking a compromise.

Finance ministers are also discussing details of banking stress tests due to be published on July 23 that they hope will assure markets that the region can cope with more shocks to the economy.

EU Economy Commissioner Olli Rehn called on governments to ready financial help for any banks if the simulations show that they would run into trouble if economic growth drops, financial conditions tighten and borrowing costs soar.

Governments were more upbeat. Austria's Proell said he thought the tests "will show that the European banking industry is robust and can withstand future crises."

It is unclear how much detail banking supervisors will make public on the 91 banks they are testing. They have never published the results of individual banks in earlier tests, giving only a general thumbs up for the entire banking sector.

[Associated Press; By AOIFE WHITE]

Associated Press writer Robert Wielaard contributed to this story.

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