During its meeting in October 2012, the
European Council decided to move forward on the legal underpinnings of a banking
supervisor at the ECB. The position was officially accepted at the next meeting in December. The position was designed to be responsible for
overseeing the banks in the states that use the euro. Some of the debate
between state leaders at the October meeting involved when the supervisor would be up
and running. The issue of timing was particularly relevant and indeed pressing at the time because
federal bailout money would flow directly to banks only once a supervisor is in
place. To the extent that Spanish banks desperately needed additional
capitalization to cover their bad debts, the ability of the
Council to come up with legislation for a supervisor position in a timely
manner—the upcoming German election notwithstanding—was crucial to stabilizing the market not only in the E.U., but internationally as well. The Council's members can be subjected to
critique in this respect.
The complete essay is at Essays on Two Federal Empires, available at Amazon.
