IMF head calls for European bank plan

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BRUSSELS, March 19 (UPI) -- The director of the International Monetary Fund, Dominique Strauss-Kahn, says a European fund is needed to bail out failing banks.

"What I think is needed is a European Resolution Authority, armed with the mandate and the tools to deal cost-effectively with failing cross-border banks," Strauss-Kahn said in a Friday speech prepared for a banking conference in Brussels, The New York Times reported.

""Fire damage can best be contained when the fire is detected and extinguished early. But even the best fire prevention system needs a fire brigade," he said.

Strauss-Kahn said "at least the major cross-border banking groups, as well as all banks running large-scale cross-border operations" should be covered by a new backup fund.

"As much as possible, the system should be pre-financed by the industry -- including through deposit insurance fees and any levies on the relevant financial institutions. To be robust, such a system needs access to financing and a fiscal backup mechanism for any net resolution costs," he said.