BRUSSELS -- At a time when the financial system needs its government the most, the government lets it down. To the dismay of the World Trade Foundation (WTF), the European Commission has decided to withhold from government assistance for banks, leaving them to foot their own restructuring and acquisitions.
Earlier on, Europe's financial sector had witnessed very promising government assistance, with approval for 70 bank rescues during this crisis. However, the sudden change of heart is leaving many banks questioning their viability in the future.
Arguing that they need to "re-invigorate competition", the commission now insists that aided banks have to pay their own restructuring costs, even at the expense of assets and cancelled acquisitions. Yet it is common knowledge that direct subsidization is the most effective form of boosting competition.
With the extra assets and capital to take over and buy out their competitors, a nation's banks could greatly increase their relative competitiveness and overall market control. Thus, the WTF calls on the European Commission to set aside its greedy nature and shelve its plans for "banks viable without state support" in favour of more aggressive and effective money management.
After all, the best use of taxpayers' money is not towards lowering the cost of medication for patients or a textbook in school, but towards solid and promising expansion of the nation's economy and financial sector. Only then can it truly develop a competitive edge over other banks, both domestically and abroad.
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