EU's unified response

Europe's efforts to put together a sustainable response to the financial meltdown resemble the U.S. effort, but, in some instances, not so much.

The underlying theme of the sweeping Frank-Dodd financial overhaul bill signed into law in July was a gallant effort, flawed or not, to focus on the consumer -- those ant-like depositors who get squashed by overdraft fees or suffer the slings and arrows of reckless bank investments, or get suckered into loans they can't afford. In large part, a response to these financial sins is what guided the legislation in Washington.

The European Union's response lacks such coordinates. In Europe, the financial meltdown has not been linked to overreaching credit card companies, payday lenders or overdraft fees. There is no equivalent in Brussels to the Consumer Financial Products Agency that will serve in Washington as official fine print watchdogs, ready to warn consumers about incendiary financial products.

Europe is as keenly focused as the United States on the issue of systemic risk and with good reason. The European Union itself is an acknowledgment that commerce in Europe is a tangled, cross border reality with British depositors reliant on Icelandic banks, for example, and banks in France at risk due to their investment in Greek bonds. Housing bubbles in Spain and California are quickly a concern in London and Frankfurt, regardless of their local markets.

It still may be a tougher call for a member of the 27-member EU to toe the line for the sake of unity than it would be for New Jersey and New Mexico to go along with the same federal immigration policy. Britain has scoffed at the notion that each nation in the EU submit its sovereign budget to a peer review -- to keep rampant government debt in check -- before presentation to its own parliament. But British Chancellor of the Exchequer George Osborne Tuesday agreed that international "architecture," as he put it, could be put in place to manage international risks.

"We welcome the creation of architecture at the European level that can coordinate national supervision," he said, as EU finance ministers agreed to form a European Systemic Risk Board to monitor financial risks across the continent.

"But we were obviously concerned," he added, "that the interests of the British taxpayer were protected, that the voice of London was heard and that we did nothing that would undermine the competitiveness of Europe."

In quick translation, Britain and others are concerned that over-regulating will drive financial businesses to more lenient countries -- almost a moot point, as the United States passed its reform bill first. "London" in translation means British regulators, a concern because Britain is not a part of the 16-member euro zone that uses the euro as currency, but only a member of the EU. Lastly, "the interests of the British taxpayer," means the banking industry should shoulder the cost of the next bailout, if it is needed.

Beyond paying for the next bailout, members of the EU disagree with restrictions that might be placed on a bailout fund, with Britain seeking an open hand and Germany seeking tighter controls on how the funds are used.

This week, European Commission President Jose Manuel Barroso said the EU had "withstood the test" of the financial crisis, adding, "Those who predicted the demise of the EU were proved wrong."

But it's not all over except for the crying. There's still some arguing ahead.

In international markets Wednesday, the Nikkei 225 in Japan fell 2.18 percent, while the Shanghai composite index in China dropped 0.11 percent. The Hang Seng index in Hong Kong fell 1.46 percent, while the Sensex in India rose 0.12 percent.

In Australia, the S&P/ASX 200 slipped 0.79 percent.

In midday trading in Europe, the FTSE 100 index in Britain rose 0.09 percent, while the DAX 30 in Germany rose 0.44 percent. The CAC 40 in France added 0.46 percent, while the pan-European DJ Stoxx 50 gained 0.85 percent.