European Central Bank May Get an Enforcement Role

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The New York Times
Thursday, September 13, 2012

European Central Bank May Get an Enforcement Role

By JACK EWING

FRANKFURT — To the European Central Bank’s existing duties — bulwark against inflation, lender of last resort, ultimate guardian of the euro — add another task: top cop for the euro zone’s banking system.

If the European Parliament and euro zone member states approve a plan presented on Wednesday by the European Commission, at the beginning of next year the central bank will become chief regulator of all banks in the euro zone, with the power to impose fines, remove top executives and even revoke banking licenses.

The central bank would supersede national regulators, which have been accused of being overly protective of the banks they oversee and reluctant to require the lenders to grapple with their problems.

But before the central bank can begin to tackle the task of regulating the more than 6,000 credit institutions in the euro zone, new staff members must be hired, money must be allocated and a clear structure must be developed to coordinate its work with the national regulators that will continue to handle most of the day-to-day tasks. No one yet has even rough estimates of how many people or how much money the central bank will need to perform the new role.

Even though the European Commission’s proposal for a banking union is a big leap, it does not grant the central bank powers on a par with those of United States banking authorities like the Federal Deposit Insurance Corporation. Under the current plan, the central bank would not have the resources needed to prevent bank runs or the authority to arrange a decent burial for a terminally ill institution.

The plan for a banking union is a work in progress, assembled in the midst of a fast-moving crisis. It is doubtful whether the central bank’s supervision of banks will do much to ease tension in the euro zone, though it might help in the future.

“They need to develop their specific operational expertise,” said Jörg Rocholl, president of the European School of Management and Technology in Berlin. “I think of this as a long-term project that can prevent the next crisis from happening, to break this nexus between banks and states.”

The plan outlined by the European Commission would, if ratified, give the central bank new supervisory powers on Jan. 1. But it is likely to take six months from that date for the central bank to build up the capacity to regulate just the biggest, cross-border banks in the euro zone. It could be a year before it is able to supervise all the banks.

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Digital Security Bills Bruised by Antipiracy Fight

Excerpt from an article in The New York Times
Thursday, February 09, 2012

Digital Security Bills Bruised by a Lingering Antipiracy Fight 

By SOMINI SENGUPTA

The ghosts of two doomed antipiracy bills hang over a new and unrelated issue on Capitol Hill: proposed legislation to help secure the nation’s nuclear plants, water systems and other essential infrastructure from hackers and terrorists.

In both houses of Congress, legislation is gaining steam that would authorize the federal government to regulate the security of privately owned critical infrastructure, much of which is controlled by Internet-connected systems and susceptible to being hacked. The legislation is already riven by competing interests and fears.

National security interests want the government to be able to collect and analyze information from private companies about how they protect themselves from attack. Those companies are skittish about government regulation generally. Civil liberties advocates warn against excessive information-gathering by the state in the name of computer security.

And members of Congress are wary of taking any steps that could infuriate the Internet lobby, which scored a surprise victory against would-be antipiracy laws last month.

Representative Dan Lungren, Republican of California, who recently introduced a computer security bill, acknowledged that Capitol Hill had learned some lessons about the new political muscle of technology companies and their users.

“One of the things we learned is that we have to raise the debate such that no one believes things are being done behind closed doors,” Mr. Lungren said in a phone interview.

A Congressional aide who did not want to be named because he was not authorized to speak to the media, put the lessons of the antipiracy efforts more bluntly. Some members, the aide said, “were kind of scarred by that experience and don’t want to go down any road where they are viewed as regulating the Internet.”