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* EU leaders agree on reforms - draft text
* Barroso secures new term, wants urgent action
* Leaders set to address Irish concerns on EU treaty
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By Darren Ennis and Jan Strupczewski
BRUSSELS, June 19 (Reuters) - European Union leaders will
back the creation of a cross-border system of bank supervisors
on Friday to help the bloc fight any new financial crisis.
Agreement was reached after late-night talks on Thursday
between British, German and French leaders eased London's fears
that the new pan-EU bodies could undermine the power of its
national regulators to guide its huge financial sector.
The agreement, outlined in a draft summit declaration
obtained by Reuters, followed U.S. President Barack Obama's
announcement on Wednesday of what he said was the biggest reform
of U.S. financial supervision since the 1930s.
EU leaders also agreed unanimously at a summit in Brussels
to support Jose Manuel Barroso's bid for a second five-year term
as president of the EU's executive European Commission, opting
for continuity in efforts to combat the economic crisis.
"The European Council took a number of decisions ... with
the aim of protecting the European financial system from future
risks and ensuring that the mistakes of the past can never be
repeated," the draft summit statement said.
The EU has been under pressure to take action following
public criticism of its handling of the economic crisis and a
record-low turnout in a European parliament election this month
which highlighted widespread voter disillusionment.
"Our citizens want to see action," Barroso told reporters on
Thursday, vowing to shield Europeans from soaring unemployment
and pull the region out of crisis. He gave few details.
NEW WATCHDOGS
The financial supervisory proposals involve creating three
pan-European regulatory bodies next year to ensure countries
introduce new rules on supervision, and a new European Systemic
Risk Board that would monitor risks to stability.
Reacting to British concerns, the summit draft said any
decisions taken by the new bodies "should not impinge in any way
on the fiscal responsibilities of member states" -- for example,
by forcing a costly bank bail-out.
Britain had feared its national regulator would lose power
to steer the financial services sector, which is crucial to its
economy, and opposed plans for the European Central Bank (ECB)
to run the European Systemic Risk Board permanently. []
The summit draft said members of the ECB's General Council
should elect the chair of the European Systemic Risk Board, a
compromise to address Britain's concerns.
The ECB General Council includes representatives of the 16
euro area countries and the 11 other EU states which, like
Britain, are outside the euro zone.
An aide to French President Nicolas Sarkozy said the ECB
backed the agreement worked out by Paris, Berlin and London but
it still needed to be rubber-stamped by other EU states.
The European Commission is due to draw up legislation on the
reforms later in the year. The summit draft said leaders would
review progress in October and "if necessary provide further
direction" -- a hint of further obstacles to come.
The EU is already working on new rules including tougher
regulations on bank capital due to take effect in 2010, tighter
monitoring of hedge funds and private equity groups, and has
issued guidelines on bankers' pay. []
Critics say the proposals are vague, leave some questions
unresolved and do not go far enough. The EU says it is acting
responsibly and swiftly.
BARROSO SET FOR NEW TERM
Barroso, a former Portuguese prime minister, set out his
plans for another five years as head of the European Commission,
a powerful EU regulator.
Barroso, 53, still needs the European Parliament's approval
next month and a more formal endorsement by the EU leaders. But
his centre-right allies are the biggest force in the assembly
and he is expected to win enough votes to be reappointed.
The leaders hope on Friday to agree on steps to help the
Irish government win voters' backing for the Lisbon treaty
intended to streamline EU decision making, which they rejected
in a referendum last June.
Agreement would pave the way for a new referendum, which
Dublin would aim to hold by early October. The treaty needs to
be ratified by all 27 states to enter forces. []
