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Europe at odds on bank policy

Italian Prime Minister Silvio Berlusconi shares a word with German Chancellor Angela Merkel on Saturday.

Associated Press

Italian Prime Minister Silvio Berlusconi shares a word with German Chancellor Angela Merkel on Saturday.

PARIS — The leaders of Europe's four largest economic powers vowed Saturday to protect their banks from the continuing reverberations of the global financial crisis but could not agree on a common Europe-wide strategy.

Unlike the United States, which last week committed $700-billion in government money to shoring up Wall Street, Europe plans to continue dealing with its financial problems on a case-by-case basis. That approach, which has involved tens of billions of dollars at a step, is complicated by the transnational presence of so many large European financial institutions.

But the European leaders did call for a global economic summit by year's end aimed at revamping the international financial system, which is a legacy of a conference held at Bretton Woods, N.H., in the waning months of World War II.

French President Nicolas Sarkozy, Europe's most vocal advocate of a continentwide response, announced that for now, he and the leaders of Britain, Germany and Italy agreed in four hours of discussions only that each country would use "its own means" to safeguard banks from collapse but would do so "in a coordinated way."

The outcome seemed to fall well short of the common policy that French and other officials had spoken of in recent days amid a rapid series of financial failures and a freezing up of the capital markets in Europe. The disunity in Europe also was apparent in complaints by some other countries that they were not included in the discussion.

Failure to pursue a broader bailout reflected particularly strong opposition from Chancellor Angela Merkel of Germany and Prime Minister Gordon Brown of Britain to any attempt at pooling resources for a Europewide fund to protect weak banks. Each government should handle its own banking problems, they said, because each country — and each bank — has specific problems that must be dealt with in different ways.

Indeed, even as the leaders discussed restoring confidence in the banking system, news reports said Germany's $49-billion rescue last week of the Hypo Real Estate Bank may not have been enough and that a further injection of government cash is under discussion.

Europe at odds on bank policy 10/04/08 [Last modified: Wednesday, November 3, 2010 2:47pm]
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