Row breaks out over Brussels plan to set up über-watchdogs

EUROPEAN officials made a last-ditch attempt yesterday to save deadlocked talks aimed at setting up bank watchdogs as a row between countries and parliament threatened efforts by Brussels to regulate finance.

Setting up supervisors to keep tabs on banks, insurers and markets is central to the European Union’s attempts to prevent another crisis but it is contentious with Britain, which does not want “über-watchdogs” that could overrule London.

Now a row has erupted between the European Parliament and national governments over what powers to give the authorities and whether they should have the final say over regulators like the Bank of England or be able to ban risky financial products.

Officials at the executive European Commission, which mediates between national diplomats and lawmakers when they are writing new laws, intervened.

They sided with parliament’s tougher line, asking that the new authorities be given the final say over national regulators but suggesting safeguards such as a veto that could be used against the watchdogs.

“The Commission is working hard to reach a final deal,” said Michel Barnier, the commissioner in charge. “There are just a few issues still to be resolved. That is why I’m making a compromise proposal to help advance negotiations.”

Should Barnier’s intervention fail, it would be a further embarrassment for the 27-country European Union, which has pledged to take a hard line on reform.