PARIS – Europe’s four major powers called for the EU to give them a freer hand to tackle the global financial crisis, and they vowed on Saturday to support their countries’ banks.
But they stopped short of coming up with a U.S.-style bailout — reflecting divisions within Europe on how to deal with the turmoil spreading from Wall Street.
The afternoon summit of leaders from France, Germany, Italy and Britain was arranged hastily with the aim to reassure jittery markets and investors.
Banking shares have plunged amid fears that banks would be unable to find credit to cover their debts. European states have pumped billions into save major banks over the last week, including Britain’s Bradford & Bingley, Belgian-Dutch Fortis, Belgium’s Dexia and Germany’s Hypo Real Estate.
The four European leaders said they would take “all necessary measures” to ensure the soundness and stability of the banking and financial system. But they gave few specifics.
They demanded more room to maneuver on European Union economy rules, with the region’s growth slowing and France and Britain falling into recession. And they asked EU regulators to act quickly and be flexible in approving government bailouts for banks.
The leaders called for stronger financial supervision and better coordination, but again offered few specifics. They said global leaders should meet “as soon as possible” to start overhauling the banking sector.
Banking executives should be held responsible if their businesses fail and should steer clear of massive reward schemes, the leaders said, but they did not say what types of punishments they would seek for failed or risk-taking executives.
The leaders also agreed to speed up a $41.5 billion package to help free up lending for small- and medium-sized businesses.
French President Nicholas Sarkozy said that, with the United States focused on its November presidential election, it was important for Europe to act in reshaping a more responsible global economy.
“We want to put down the foundations of a capitalism of the entrepreneur and not of the speculator. We want transparency; we want moralization. We want the creation of value. We want people to have confidence,” the French leader and summit host said.
He called the crisis “an opportunity to build something,” and said EU leaders hoped it would open the door to “a new world that has fewer of these things, these problems.”
The talks were also attended by German Chancellor Angela Merkel, Italian Premier Silvio Berlusconi and British leader Gordon Brown.
Europe is divided over what type of actions it should take.
France had mooted — but backed off — a multibillion-dollar EU-wide government bailout plan; Germany believes banks must find their own way out of the turmoil.
The EU’s failure to pull together on dealing with the crisis has caused worry. Both Ireland and Greece angered their EU neighbors by acting independently last week and guaranteeing to protect all savings. That goes far beyond the standard EU guarantee for the first $27,668 in a bank account — and could see worried savers elsewhere in Europe move money where they believe it will be safe.
At the summit, the leaders agreed they would act “in a coordinated manner” when supporting their banks, but they did not explain exactly how that would be done or whether other countries would be prevented from acting alone.
On Friday, U.S. Congress approved a $700 billion government plan to buy up bad debt from banks and help unfreeze lending, which President Bush quickly signed into law.
The head of the International Monetary Fund, who met with Sarkozy before the summit, said the crisis represented a “trial by fire” for the euro, Europe’s 10-year-old common currency — and would require a quick, coordinated response.
“We have to make sure Europe takes its responsibilities like the United States,” said Dominique Strauss-Kahn.
The EU leaders were joined in their talks by European Commission President Jose Manuel Barroso, European Central Bank President Jean-Claude Trichet and top economic official Jean-Claude Juncker.
German Economy Minister Michael Glos told Bild am Sonntag newspaper before the meeting that any emergency bailout would distract from efforts banks should be making themselves to restore confidence.
“Banks don’t trust each other anymore. That’s the core of the financial market crisis,” he said. “In this situation, I don’t think it’s defensible to demand the state restore the trust that has been gambled away with large-scale debt write-offs using tax money.”