Complaint against banking union: a settlement at the expense of taxpayers?

For four years, the major European banks have been placed under the auspices of the ECB. In case of urgency, euro area countries pay additional funds into a fund. The Constitutional Court is now dealing with the banking union.

By Gigi Deppe, ARD-Rechtsredaktion

Unique banking supervision in Europe – this looks good in light of the many banking crises of the last decade. But a group around Berlin-based financial scientist Markus Kerber is more worried about supervision by the European Central Bank (ECB).

She joined the Federal Constitutional Court. They fear that with the new so-called banking union, German savers will have to pay in the end for troubled financial institutions, especially in southern Europe.

Taxpayers should no longer be responsible

In November 2014, the ECB started with European supervision. It is supposed to monitor the 120 largest banks in the euro area and, in case of emergency, treat them. If funds are needed, the ECB should be able to benefit from a pooled fund.

The idea behind the entire Banking Union: the monitoring should be independent of the government of the country concerned. And it should no longer be the taxpayer in all EU countries for the rescue of responsible banks.

For example, the ECB became active in June 2017: the sixth bank in Spain, Banco Popular, had more money. The clients were so withdrawn that the bank threatened immediate bankruptcy.

The bank supervisor of the ECB organized the sale to another bank, Banco Santander, for exactly one euro. The stock of Banco Popular was therefore worthless and investors indirectly financed the rescue. But savers were able to withdraw money the next day.

Conflict of interest of the ECB?

But for the critics who have now joined the Federal Constitutional Court, there are enough negative examples. They point out on the other hand that the third Italian bank, Monte the Pasci, has not been liquidated in 2016, but that it has again benefited from a lot of money from the tax package Italian.

The supervision of the European Central Bank is impenetrable for them. They also believe that the transfer of electricity to the ECB is essential because it is the main driver of price stability. From the plaintiff's point of view, a conflict of interest. It is conceivable, for example, that the ECB would have to raise its key rates to ensure the stability of the euro – but that it could give up, because high interest rates make life difficult for unstable banks.

Does the EU's "banking union" give too much power?

Applicants are particularly critical of the common fund with which the flickering candidates must be stabilized. In this case, for example, the German banks would have to file. However, the German government can no longer determine how the money will be used.

They therefore complain to the Federal Constitutional Court: the EU should not be given so much power, which is not provided for in the European Treaties. Germany should not have been allowed to participate, so the Bundestag blew up what is allowed by the Basic Law.

The Federal Constitutional Court wants today to negotiate complaints throughout the day. But a decision will come only in a few months.