* EU says cross-border supervision is major progress
* Barroso secures new term, faces parliamentary test
* Irish win protocol on EU reform treaty guarantees
(Adds analysts, details on Irish guarantees)
By Darren Ennis and Jan Strupczewski
BRUSSELS, June 19 (Reuters) - European Union leaders
approved the creation of Europe's first regional system of
financial supervisors on Friday to help prevent any new economic
crisis, but gave the new authorities only limited powers.
The leaders also agreed legal guarantees intended to win
voter approval for the EU's Lisbon treaty in Ireland, one of
three countries yet to ratify reforms needed to streamline EU
decision making following the bloc's expansion to 27 states.
[]
They also unanimously supported Jose Manuel Barroso's bid
for a second five-year term as president of the EU's executive
European Commission at a summit in Brussels, opting for
continuity in efforts to combat the economic crisis.
The agreement on the overhaul of financial supervision
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.
"Nine months ago, if I had said we would agree on a system
of pan-EU supervision with binding powers not one of you would
have believed me," French President Nicolas Sarkozy said, but
acknowledged the revamp was not as ambitious as he had wanted.
Agreement was reached only after late-night talks between
Britain, Germany and France addressed concerns in London and
elsewhere that the new pan-EU bodies could undermine the powers
of national regulators.
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 financial stability.
Reacting to British concerns, a summit statement 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.
"I have ensured that British taxpayers will be properly
protected," Prime Minister Gordon Brown said afterwards.
NO REVOLUTION
Britain also resisted a plan for the European Central Bank
-- which sets interest rates in the 16-country euro zone -- to
permanently chair the new EU systemic risk body. []
Leaders instead agreed the ECB's General Council board, made
up of 11 non-euro states such as Britain, would elect the chair,
a compromise Sarkozy said would still leave the ECB in charge.
The EU has been under pressure to take action following
public criticism of its handling of the crisis and a record-low
turnout in a European parliament election this month which
highlighted voter discontent as unemployment rises.
But experts said the EU's regulations to guard against a
repeat of the crisis paled in comparison to Washington's bolder
moves to give the state powers to intervene.
"It is not the revolution you might expect after such a
crisis," said Daniel Gros, director of the Centre for European
Policy Studies, a Brussels think tank.
The bloc 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. []
"MORE EUROPE"
That work is likely to be overseen by Barroso. The
53-year-old former Portuguese prime minister needs the European
Parliament's approval next month and a more formal endorsement
by the EU leaders but is expected to overcome these hurdles.
"We need more Europe, not less Europe," Barroso told a news
conference, accepting the nomination. His centre-right allies
are the largest force in the European Parliament and will now
seek to rally a majority before a mid-July confirmation vote.
A deal between Britain, the Czech Republic and Ireland
cleared the way to agreement on assurances for voters that Irish
policy on matters from military neutrality to abortion will be
unaffected by the Lisbon treaty.
These are intended to address concerns of voters who
rejected the treaty in a referendum last June. The treaty
requires the backing of all member states to take effect.
Ireland, Poland and the Czech Republic have not yet completed
ratification procedures. []
"I feel we will be in a position to hold a second referendum
at the start of October," Cowen told reporters, welcoming the
fact that the guarantees would in the future be given the full
status of an EU treaty protocol.
