Willingly or otherwise, Europe is falling into line behind the unstoppable leadership of the United States of America.
The European Union is poised to delay tough new capital requirements after the U.S. did so, while the U.K. said it will let the U.S. lead the liquidation of American banks, even those with British subsidiaries.
First, to Brussels (well, Rome actually), where the EU seems resigned to putting off adoption of Basel III capital requirements for as long as a year. "We are going towards a postponement of Basel III to the end of 2013, January 2014 at the latest," Fabrizio Saccomanni, who heads the Banca d'Italia, said.
Many officials in Brussels had been expecting a delay following a U.S. decision to abandon the January 2013 target and in light of difficulties between EU countries and the bloc's parliament in finalizing the rules.
Such a delay would deal a further blow to the global Basel III accord, which was struck by central bankers and regulators in a bid to make banks less risky. It requires banks to set aside more capital to cover losses such as unpaid loans and had been due to start from January 1, 2013.
Now on to London (actually Washington, D.C.), where the Brits, who generously host almost 90% of U.S. banks' international assets and derivatives, moved to prevent another Lehman Brothers-style trans-Atlantic collapse nightmare.
"The United Kingdom authorities are prepared in principle to stand back and let you execute a resolution," said Paul Tucker, deputy governor of the Bank of England.
Mr. Tucker, speaking at a Federal Deposit Insurance Corp. forum on Monday in Washington, said U.K. regulators wouldn't seize subsidiaries, branches or assets of the failing U.S. firm that are located in the U.K., saying his government would "leave it to you to do it, without our stepping in and interfering."
The special relationship is thusly saved.