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Eurozone Leaders Agree to Bail Out and Supervise Banks

June 29, 2012 at 12:00 AM EDT
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JEFFREY BROWN: And to some unexpected progress in the battle against Europe’s financial crisis.

For months, members of the 17-nation eurozone have struggled to resolve disagreements over bailouts and spending cuts, with German Chancellor Angela Merkel taking a very public hard line.

But at a summit today, she and others surprised most observers with new steps. Those include allowing banks to get capital directly from a $600 billion bailout fund, instead of getting the money through governments, creating a new banking supervisor for the eurozone, and letting some troubled countries tap into rescue funds more easily.

As we have heard, the markets liked it and Europeans had some respite as they enjoyed or, depending on the country, despaired over the ongoing soccer championship.

James Mates of Independent Television News begins our look.

JAMES MATES: They kept her up for most of the night and by the time Chancellor Merkel emerged bleary-eyed into the Brussels dawn, she had agreed to policies that just a day before she called eyewash and fake solutions.

Emulating his footballers, Italy’s prime minister, Mario Monti, had scored a second victory of the night over Germany. Proving that sometimes beggars can be choosers, he and his Spanish counterpart had come to Brussels seeking help and then threatened to block everything until they got it. Such is the precarious state of the euro that Angela Merkel feared the currency might have collapsed if she had said no.

SONY KAPOOR, economic adviser, Re-Define: There has been a real threat to the existence of the euro coming into this summit. And if the summit had not delivered anything at all, come Monday morning, we would have seen a massive market panic which may not have been controllable.

JAMES MATES: So exactly a week ago, at a meeting in Rome, Angela Merkel had said German taxpayers’ money couldn’t be used to rescue Spanish banks directly because “I’m the chancellor of Germany and I can’t tell them what to do.”

Today, the message was very different.

“I think we made a good compromise,” she said.

But doing what you said you would never do sounds more like a defeat than a compromise.

David Cameron’s role has been to dodge between the warring parties, hoping none of this damages British interests. For once, he has been able to stand back from the fray.

DAVID CAMERON, British prime minister: Italy, Spain, France, Germany, they may be playing each other at football, but when it comes to the eurozone, they should all be on the same side. And the side they need to be on is doing what is necessary to make their single currency succeed.

JAMES MATES: That may be a way off yet, but they have at least kept the life support systems working. This had been billed as the week to save the euro. And the immediate danger has been averted. We may, though, be back here again quite soon.