European governments have spent over one and a half trillion euros bailing out their banks since 2007. The argument was that these financial institutions were ‘too big to fail’, and that they would bring down the entire financial system if they were allowed to go under. At the same time, governments have been cutting budgets and services in order to bring down rising levels of public debt. Understandably, European taxpayers are annoyed at all this. How can we avoid a repeat of the financial crisis of 2007-2008? How can we ensure that banks won’t need similar bailouts from the public in future?
What do our readers think? We had a comment sent in from Marcel, arguing that European politicians always seem to “put the interests of the financial markets and banks first. Since 2008, [we have had] bailouts for the rich paid for by austerity from the poor and middle class.”
How would YOU ensure that banks won’t need bailouts again? We asked Members of the European Parliament (MEPs) from all sides of the political spectrum to stake out their positions on this question, and it’s up to YOU to vote for the policies you favour. See what the different MEPs have to say, then vote at the bottom of this debate for the one you most agree with! Take part in the vote below and tell us who you support in the European Parliament!
I think one of the core issues is that we must seperate the casino banking from the prudent banking which serves financing, investments in the real economy. So banks that speculate should speculate with their own money, and we have to avoid that this has feedback loops into the core banking sector by seperation, and we must avoid that the taxpayer foots the bill.
Well, you have to make sure that any bank can fail without taxpayer intervention. A number of measures have been taken, but we are still confronted by ‘too big to fail’ financial institutions. So, we need smaller and less interconnected banks. We need reforms that includes splitting investment banks from retail banks… Also, we have to make the portfolios of these banks more diversse, in order to prevent them putting all their eggs in one basket. We are not even halfway toward reforming the financial sector in Europe.
My ambition is to ensure that our banks can be competitive and capable of supporting economic growth through credit provision and investment whilst also being stable players in society… European banks must be able to finance investment if we are to return to stable growth, job creation and strengthened competitiveness. My point of departure is that the structure of banks as such must not be a problem. It is rather if the structure leads to unwarranted risk exposures that financial stability can be put in peril.
[We need] to prohibit certain speculative activities that have – and will continue to – damage the global economy… Putting and an end to the “too big to fail” [banks] is a hard task: the financial institutions cannot be completely isolated from all external shocks. Furthermore, there is no strong regulation for the banks’ activities, no substantial bank separation, or adequate supervision… We will continue to fight in order to change regulation measures from passive to active, so that bank activities will be regulated closely [and] to have the separation of banks.
Curious to learn more about Europe’s banking crisis? We’ve put together some facts and figures in the infographic below (click for a bigger image):
IMAGE CREDITS: CC / Flickr – Glenn Halog
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