Popular Austrian journalist Ronald Barazon wrote a column in the Sept. 20 Salzburger Nachrichten (of which he is former editor), attacking Austrian Member of the European Parliament Othmar Karas who last week had defended the European Union Banking Union scheme.
“The measures are either ineffective or even damaging,”
“What we need is not a thousand papers, but a few guidelines. The most important guideline must make clear that banks managing deposits of companies and private persons are not allowed to speculate and should concentrate on the broad issue of credit. Only such banks, in case of a crisis, can apply for guarantees or for state aid.
“Parallel to this, there should be a second, clearly recognizable category of banks, which can speculate as much as they want. In a crisis, such banks would go under, and their clients would only have the right to a share in the insolvency reserves.
“Exactly this decisive separation is not contained in the hodge-podge of EU guidelines. Banks can speculate as before with clients’ deposits.”
Barazon blasts the EU Banking Union scheme, in which “all banks of the EU or the Eurozone guarantee for all other banks. This concept is illegal: Nobody can be forced to take a guarantee for someone else.” It is also economically insane. How can one bank guarantee for another one, over which it has no influence?
“The planned European Banking Union would be a forced union, doomed to fail.”