Europe Economy

EU Chief Calls for Quick Deal to Help Greece

Associated Press

European Commission President Jose Manuel Barroso says the EU needs to agree as soon as possible on a mechanism to support Greece financially if needed.

Flags of member states of the European Union.
Armando Franca

European Union leaders are meeting next week to discuss a rescue package to convince markets that Greece will not be allowed to default, therefore easing its borrowing rates. However, Germany has resisted the idea of direct financial support.

Greece warned it will be forced to turn to the International Monetary Fund if the EU can't agree to a bailout plan.

Barroso told France 24 TV that Europe believes what "we should have now is as soon as possible some kind if mechanism prepared just in case."

The interview was recorded Thursday and will be broadcast Saturday. A copy was provided Friday to The Associated Press.

'Fire Brigade' for Banks

Meanwhile, the head of the International Monetary Fund said the European Union needs to come up with "a fire brigade" to deal with the collapse of banks that operate across several countries.

Dominique Strauss-Kahn says existing plans "have proven to be inadequate" making cross-border bank failures difficult to handle and more costly than necessary.

Strauss-Kahn is calling for a new European authority to deal with insolvent banks that would force shareholders and uninsured creditors to bear the costs of failure.

Taxpayers picked up the bill for banks that nearly collapsed in 2008.

Strauss-Kahn suggests it should also be funded by levies on financial groups and deposit insurance fees.