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Darling concedes to Europe over bank bailouts

Chancellor Alistair Darling has backed down on a major piece of European legislation which will give powers to the European systemic risk board allowing them to force national Governments to rescue banks in the event of a future credit crunch.

City minister Lord Myners said at a Treasury select committee meeting last month that the UK would lobby against such powers being introduced saying that responsibility for bailing out banks should rest with the national Governments because they would be paying for it.

But the latest text of the agreed legislation allows the ESRB to defy a national Government with disputes over paying for bailouts to be reached by majority voting.

The UK was pushing for a final right of veto but this is understood to have been omitted from the text. There will be an appeals process for those objecting to ESRB decisions but it is likely to be a drawn out process.

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