* EU leaders back reforms - draft text
* Barroso secures new term, wants urgent action
* Irish secures assurances on EU reform treaty
(Adds analysts, details on Irish guarantees)
By Darren Ennis and Jan Strupczewski
BRUSSELS, June 19 (Reuters) - European Union leaders agreed
on Friday to back the creation of a European system of financial
supervisors to help prevent any new economic crisis, but gave
them only limited powers.
The leaders also outlined proposals intended to win approval
for the EU's Lisbon treaty in Ireland, one of three countries
yet to ratify reforms needed to streamline EU decision making
following the bloc's expansion to 27 member states.
Agreement was reached on the regulatory reforms after
late-night talks in Brussels between Britain, Germany and France
addressed concerns in London that the new pan-EU bodies could
undermine the powers of national regulators.
The agreement, outlined in a draft summit declaration
obtained by Reuters, followed U.S. President Barack Obama's
announcement on Wednesday of what he said was the biggest reform
of U.S. financial supervision since the 1930s.
"The European Union, like the rest of the world, still faces
the effects of the deepest and most widespread recession of the
post-war era. It is imperative for the EU to continue to develop
and implement the measures required to respond to the crisis,"
the leaders said in the draft declaration.
They also agreed unanimously at a summit in Brussels to
support Jose Manuel Barroso's bid for a second five-year term as
president of the EU's executive European Commission, opting for
continuity in efforts to combat the economic crisis.
The EU has been under pressure to take action following
public criticism of its handling of the crisis and a record-low
turnout in a European parliament election this month which
highlighted voter discontent as unemployment rises.
NEW WATCHDOGS
The financial supervisory proposals involve creating three
pan-European regulatory bodies next year to ensure countries
introduce new rules on supervision, and a new European Systemic
Risk Board that would monitor risks to financial stability.
Reacting to British concerns, the summit draft said any
decisions taken by the new bodies "should not impinge in any way
on the fiscal responsibilities of member states" -- for example,
by forcing a costly bank bail-out.
Britain had feared its national regulator would lose power
to steer the financial services sector, which is crucial to its
economy, and opposed plans for the European Central Bank (ECB)
to run the European Systemic Risk Board permanently. []
The summit draft said members of the ECB's General Council
should elect the chair of the European Systemic Risk Board, a
compromise to address Britain's concerns.
The ECB General Council includes representatives of the 16
euro area countries and the 11 other EU states which, like
Britain, are outside the euro zone.
Experts said the EU's regulations to guard against a repeat
of the crisis paled in comparison to Washington's bolder moves
to give the state powers to intervene.
"It is not the revolution you might expect after such a
crisis," said Daniel Gros, director of the Centre for European
Policy Studies, a Brussels think tank.
MORE WORK NEEDED
The European Commission is due to draw up legislation on the
reforms later this year. The summit draft said leaders would
review progress in October and "if necessary provide further
direction" -- a hint of further obstacles to come.
The EU is already working on new rules including tougher
regulations on bank capital due to take effect in 2010, tighter
monitoring of hedge funds and private equity groups, and has
issued guidelines on bankers' pay. []
The work is likely to be overseen by Barroso. The
53-year-old former Portuguese prime minister needs the European
Parliament's approval next month and a more formal endorsement
by the EU leaders but is expected to overcome these hurdles.
A deal between Britain, the Czech Republic and Ireland
cleared the way to agreement on assurances for voters that Irish
policy on matters from military neutrality to abortion will be
unaffected by the Lisbon treaty, diplomats said.
These are intended to address concerns of voters who
rejected the treaty in a referendum last June and ensure they
back it in a new referendum expected by early October.
The treaty requires the backing of all member states to take
effect. Ireland, Poland and the Czech Republic have not yet
completed ratification procedures. []
