IMF: Europe needs agency to manage bank failures

[March 19, 2010]  BRUSSELS (AP) -- The head of the International Monetary Fund says the European Union needs to come up with "a fire brigade" to deal with the collapse of banks that operate across several countries.

Dominique Strauss-Kahn says existing plans "have proven to be inadequate," making cross-border bank failures difficult to handle and more costly than necessary.

He is calling for a new European authority to deal with insolvent banks that would force shareholders and uninsured creditors to bear the costs of failure.

Taxpayers picked up the bill for banks that nearly collapsed in 2008.

He suggested Friday the authority should also be funded by levies on financial groups and deposit insurance fees.

[Associated Press]

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