German banker likens Brussels bank powers to Nazi ‘enabling acts’

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The head of a Bavarian banking association compared the European Commission’s plan to grant itself the final say on winding up troubled banks to the type of law that allowed the Nazis to seize power.

The comments by Stephan Götzl, head of the GVB, the Bavarian association of co-operative banks, underscore the depth of German opposition to the plans presented on Tuesday by Michel Barnier, EU commissioner for internal market and services.

Addressing a regional banking convention in Munich on Thursday, Mr Götzl said he opposed the commission’s proposal to allocate itself new powers and compared it to an “enabling act”.

“We in Germany have had a bad experience with enabling acts,” he said, appearing to refer to the 1933 constitutional amendment that handed the Nazis sweeping powers to enact legislation, unchecked by parliament.

The remarks were first reported by the Wall Street Journal and confirmed later by a spokesman. The spokesman noted Mr Götzl had not specifically mentioned Hitler or the Nazis.

The comments reflects deep German concern that the commission has overstepped its legal powers with a proposal to make itself the top authority for winding up eurozone banks.

The “single resolution mechanism” would give the commission ultimate authority over the eurozone’s 6,400 banks, with responsibility to pull the plug on a shaky lender and the authority to overrule its home state.

“In our view, this proposal gives the commission powers it does not possess according to current [EU] treaties,” chancellor Angela Merkel’s spokesman said on Tuesday

Wolfgang Schäuble, Ms Merkel’s finance minister, also warned Brussels to respect the limits of the law or “risk major turbulence”.

A spokesperson for Mr Barnier declined to respond to Mr Götzl’s comments.

Mr Barnier is confident the proposed measures are legally sound and cites support from lawyers at the commission, the European council and European Central Bank. Officials say they reluctantly proposed powers for the commission, rather than a separate agency, and did so only because it was the most legally solid and effective institution to handle bank crises under existing EU treaties.

Mr Barnier contends Europe cannot afford to wait for treaty change, which is typically an arduous process that can take years. Brussels wants the resolution regime, commanding some 300 staff, to begin from January 2015.

However, given resistance from Germany, which is demanding a more gradual two-step approach, the commission faces a tough battle to reach a deal before the European parliament shuts for elections in March next year.

Additional reporting by Alex Barker

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