European bank supervisor step closer but deal hazy

By Sarah Dilorenzo

Associated Press

Published: Friday, Oct. 19 2012 12:00 a.m. MDT

But German Chancellor Angela Merkel and her allies were singing a different tune. Merkel has repeatedly said that the quality of supervision should take precedence over speed.

In Berlin, lawmakers in her party were claiming they'd won.

"The chancellor said here yesterday that, as far as the banking union and banking supervision are concerned, thoroughness goes before speed," Norbert Barthle, a senior lawmaker with Merkel's Christian Democrats, said.

Merkel also denied she was playing politics on the banking supervisor after suggestions she was pushing it off until after German elections next fall.

"This is a bad insinuation," she said. "I have no link in mind between the upcoming elections and the banking authority."

Thorny questions still remain about which banks would be eligible for the direct loans. Ireland, for instance, was forced into a bailout because of the expense of saving its banks — but it's unclear whether its banks would be eligible for relief from the bailout fund retroactively.

The bloc is also facing questions of how to help Greece dig out of its debt hole. The country's international creditors are currently deciding whether to hand out its next batch of loans, which Greece needs to avoid default and stay in the eurozone.

"The question of Greece's place in the eurozone must not be asked anymore," Hollande told reporters, although he had earlier said it was not a settled matter.

Leaders also briefly talked about foreign policy issues on Friday, but economics seemed to overshadow those talks. They condemned a government crackdown in Syria, militancy in Mali and Iran's nuclear program.

Don Melvin in Brussels and Geir Moulson in Berlin contributed to this report.

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