EU lawmakers demand more clout for watchdogs

BRUSSELS (Reuters) - European lawmakers will demand more clout for pan-EU watchdogs next Monday that would let them step in to take charge at struggling banks or ban market betting like short selling.

But their plans will put them on a collision course with Britain, which fears the new bodies will have too much influence over London, Europe's biggest financial center.

The lawmakers, bolstered by the worsening economic crisis in Europe, will outline their demands next week for a trio of super-watchdogs central to imposing tighter controls on financial services in the 27-country bloc.

They will also seek to fast track the setting up of an emergency fund paid for by banks as well as a pan-European deposit protection scheme for savers, according to draft documents seen by Reuters.

"New European supervisory authorities are going to be born," said Antolin Sanchez Presedo, one of the lawmakers who will present parliament's demands.

"We are going further ... in strengthening the new authorities. The crisis in Europe shows that we are right to do so."

Sven Giegold, a senior parliamentarian drafting the new law, said: "We have to give the new supervisors powers to deal with emergencies and the speculators that are escalating the crisis."

Britain, whose blessing is needed for such a law to come into force, has fought hard to water down the watchdog's influence, winning some concessions that could now be overturned by parliament.

Last December, British chancellor Alistair Darling agreed to let the EU establish new authorities to police financial services but only on the condition a country could veto their decisions if they would cost public money.

Lawmakers in Brussels want to do away with this blanket veto by insisting that a country who challenges a ruling must first prove it would cost taxpayer money and then convince a majority of other European countries to back it.

Parliamentarians will also propose giving more direct powers to the supervisors. This would mean they could overrule national watchdogs like Britain's Financial Services Authority in telling international banks in London such as HSBC (HSBA.L) what to do.

One parliamentary source said Britain was sure to object to parliament's demands.

"It is a complete flight of fantasy by parliament," he said. "There is no way that the council will agree to this."

(Editing by Toby Chopra)