Europe Summit: What to Expect
Today is supposed to be the deadline for a European debt deal. Since the meeting of European leaders doesn't start until 7:15 PM in Brussels (1:15ET), the announcement will not occur until later this evening. From a variety of leaked sources, here's what to expect:
- Restructure Greek debt: the plan is likely to reduce the Greek debt held by private investors by 50 percent (a so-called "haircut"), according to an official involved in the talks. Some think that the amount needs to be higher, but as my colleague Jack Otter said, "it's nice progress, especially when you consider that Goldman Sachs took a ZERO percent haircut on its exposure to AIG." Amen!
- Force European banks to beef-up their assets by requiring a 9 percent capital ratio by June 2012: banks that can't raise the money in the private markets will get government assistance. (Requirement could amount to an additional 110 billion euros ($150 billion).
- Leverage the 440 billion euro European Financial Stability Fund ("EFSF"): The prime minister of Belgium says the bailout fund needs to be at least $1.4 trillion to contain the crisis. Earlier in the day, Germany's parliament approved a motion to increase the rescue fund by using leverage.
If you forgot why we should care about the European debt crisis, here's a quick refresher:
More on MoneyWatch: Europe: Inching Towards a Deal
