Cyprus mulls seizing 1/4 of major deposits

Reuters
March 24, 2013, 12:01 am TWN

Finance Minister Michael Sarris said “significant progress” had been made in talks in Nicosia with officials from the European Union, European Central Bank and International Monetary Fund.

He confirmed discussions were centered on a possible levy of around 25 percent on holdings of over 100,000 euros at Bank of Cyprus, and expressed hope that a package could be ready by the end of the day for approval by parliament.

Cyprus faces a Monday deadline to clinch a bailout deal with the EU or the European Central Bank says it will cut off emergency cash to the island's oversized and stricken banks, spelling certain collapse and a potential exit from Europe's single currency.

Amid signs of momentum, Cypriot and EU officials said Cypriot President Nicos Anastasiades was expected in Brussels on Sunday to meet EU leaders including Council President Herman Van Rompuy and Commission President Jose-Manuel Barroso, as well as IMF Managing Director Christine Lagarde and the head of the ECB, Mario Draghi.

Van Rompuy and Barroso cancelled a planned EU-Japan summit in Tokyo to tend to the Cyprus saga and euro zone officials told Reuters that the bloc's 17 finance ministers would meet on Sunday afternoon.

“Significant progress has been made in the direction of getting a deal, at least at the troika level,” Sarris told reporters.

He said a number of issues were still outstanding, but that a package could be ready “late this afternoon or early evening” for approval by parliament.

Arriving at the troika talks, Andreas Artemi, chairman of Bank of Cyprus, was asked if a 25-percent haircut was being considered on uninsured deposits. He replied: “I don't know that yet.”

A senior lawmaker told Reuters earlier on Saturday that parliament was not expected to convene until after the meeting of euro zone finance ministers on Sunday afternoon, taking the crisis right down to the wire.

The same legislature on Tuesday angrily threw out a proposed levy on bank deposits, designed to raise the 5.8 billion euros the EU wants in return for a 10 billion euro (US$13 billion) bailout.

The tax is unprecedented in Europe's handling of a debt crisis that has spread from Greece, to Ireland, Portugal, Spain and Italy. It is by no means certain the tiny legislature will accept the measure this time around.

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US Senate narrowly passes first budget in four years

By David Lawder ,Reuters
March 24, 2013, 12:01 am TWN

The budget plan was passed by a 50-49 vote in the Democratic-controlled chamber. Four Democratic senators facing tough re-election campaigns in 2014 joined all the Senate Republicans in opposing the measure, which seeks to raise nearly US$1 trillion in new tax revenues by closing some tax breaks for the wealthy.

The Senate budget, which reflects Democratic priorities of boosting near-term job growth and preserving social safety net programs, will square off in coming months against a Republican-focused budget passed by the Republican-dominated House of Representatives.

Neither of the non-binding blueprints has a chance of passage in the opposing chamber, leaving Congress no closer to resolving deep differences over how to shrink U.S. deficits and grow the economy. But they give each party a platform from which to tout their respective fiscal visions.

The Democrats' plan from Senate Budget Committee Chairman Patty Murray aims to reduce deficits by US$1.85 trillion over 10 years through an equal mix of tax increases and spending cuts.

The Republican plan from House Budget Committee Chairman Paul Ryan seeks US$4.6 trillion in savings over the same period without raising new taxes. It aims to reach a small surplus by 2023 through deep cuts to health care and social programs that aid the poor.

Murray said after the vote that she would try to work with Ryan on a path toward compromise.

“While it is clear that the policies, values, and priorities of the Senate budget are very different than those articulated in the House budget, I know the American people are expecting us to work together to end the gridlock and find common ground, and I plan to continue doing exactly that.”

Shutdown Threat

Passage of a stop-gap government funding measure on Thursday lowered the temperature in the budget debate by eliminating the threat of a government shutdown next week.

“We're going to get a breather here. Congress will let things cool off a bit and there'll be other issues that come to the forefront in the spring,” said Greg Valliere, chief political strategist at Potomac Research Group, a firm that advises institutional investors on Washington politics.

These issues include legislation on gun control, immigration reform and initial work on simplifying the tax code, which is particularly important to Republicans.

Joining Republicans in opposing the Democratic budget were Democratic senators from conservative-leaning states: Max Baucus of Montana, Mark Begich of Alaska, Kay Hagan of North Carolina and Mark Pryor of Arkansas. Voting for a budget that raises tax revenues could increase their vulnerability in congressional elections next year and put Democrats' thin majority at risk.

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Pope Francis tells Benedict: 'We're brothers'