EU leaders vow to battle financial crisis

[dr.umer]

EU leaders vow to battle financial crisis​

PARIS: Europe's four major powers vowed Saturday to do all they could to prevent Wall Street's turmoil from destabilizing their banking systems, even as a euro35 billion (US$48 billion) plan to save a German lender fell apart.

But aside from vague statements of intent and calls for tighter regulation, the leaders of Germany, France, Britain and Italy shied away from the sort of massive bailout passed by the US Congress on Friday.

Europe's four largest economies pledged to coordinate national responses to help banks in distress, but their failure to agree an EU-wide plan reflects divisions in Europe on how to deal with the crisis washing up on the continent's shores from the United States.

France had mooted a multibillion-euro (multibillion-dollar) EU-wide government bailout plan, but backed off after Germany said banks must find their own way out.

The EU's failure during the past week to pull together on dealing with the crisis has caused worry. Both Ireland and Greece angered their EU neighbors by acting independently and guaranteeing to protect all savings.

The Saturday afternoon summit was arranged hastily with the aim of reassuring jittery markets and investors.

The four leaders _ French President Nicolas Sarkozy, British Prime Minister Gordon Brown, German Chancellor Angela Merkel and Italian Premier Silvio Berlusconi _ vowed to ensure the soundness and stability of Europe's banking and financial system, but they gave few specifics.

Instead, they took a swipe at European subsidy rules designed to ensure fair competition by preventing governments propping up failing companies.

The European leaders also demanded more room for maneuver on EU economy rules as European growth slows sharply.

Sarkozy, the summit host, said all four nations ‘pledged that in cases of public support to banks in difficulty, the managers will be punished, and shareholders as well will bear some of the consequences.’

They pledged to help small companies seeking credit by speeding up the release of euro30 billion ($41.5 billion) in European Investment Bank loans.

‘We want to put down the foundations of capitalism of the entrepreneur and not of the speculator. We want transparency, we want moralization. We want the creation of value. We want people to have confidence,’ he said.

But he recognized the need for global cooperation, calling for a summit of world leaders to tighten control over hedge funds and other high-risk investment funds that don't currently face all the same rules as banks and insurers.