'Last Opportunity': ECB and Politicians at Odds Over Stress Tests

[unhappycamper]

http://www.spiegel.de/international/business/ecb-at-loggerheads-with-policymakers-over-banking-stress-tests-a-925256.html



The European Central Bank wants to impose rigid tests on financial companies in the euro zone before it assumes its new supervisory role. But even before the tests are set to begin, the ECB is already tangling with policymakers.

'Last Opportunity': ECB and Politicians at Odds Over Stress Tests
September 30, 2013 – 01:10 PM

Jörg Asmussen is introduced as someone who "was in the eye of the storm." After five years of the financial crisis, Asmussen, who is bald and walks with a slight stoop, is taking stock before the attendees of a conference at a Frankfurt hotel.

But Asmussen, a former state secretary in the German Finance Ministry, doesn't spend much time dwelling on the past. Today he is a member of the executive board of the European Central Bank (ECB), which is currently launching a large-scale project to finally clear away the toxic assets left over from the crisis and build a new firewall, the European banking union. The first part consists of a balance sheet test. The ECB plans to put 130 major banks to the acid test before it assumes regulatory supervision of the institutions in the fall of 2014.

"This test is not a threat," Asmussen tells his audience. "But after two failed stress tests, this is the last opportunity to reestablish confidence in the European banking system."

A comparison with the United States shows what bad shape the industry is in. US financial groups are reporting record profits, while banks in the euro zone have lost more than €80 billion ($108 billion) in the last two years. The Europeans failed to adequately address their banking crisis. In the United States, 10 times as many ailing banks were closed and balance sheets were more consistently relieved of bad debt than in the euro zone. The ECB stress test is intended to introduce a long-overdue spring cleaning in Europe.