Berlusconi's Cabinet works on bank reform

Premier Silvio Berlusconi said his Cabinet will discuss Tuesday who will be the nation's next central bank chief and finish up work on legislation to reform the scandal-tainted nation's banking industry in the wake of the resignation of the Bank of Italy head. "During today's Cabinet meeting we will discuss everything: the law, the method (to chose the governor) and the name," Berlusconi said. Among the measures expected to be part of the reform was one revising the length of the term of the central bank chief. Antonio Fazio, who submitted his resignation as Bank of Italy governor on Monday, is under investigation for alleged abuse of power and reportedly also for insider trading. He was selected by the bank in 1993 for the life term, an appointment approved by the Italian president. The proposed changes would make the position a fixed term, perhaps five years, and the appointment would be made by government in consultation with Parliament.

Consumer groups have demanded reform of Italy's clubby banking industry for decades. Some politicians joined the chorus two years ago when the Parmalat fraud scandal broke. Thousands of small investors lost money in that scandal, and watchdog groups said the Bank of Italy hadn't been vigilant enough about the company's financial state as banks issued Parmalat bonds.

Berlusconi, who faces a re-election bid in the spring, vowed quick action on the reforms. "We have decided to approve the savings reform before Christmas," the Italian news agency ANSA quoted Berlusconi as telling journalists in Parliament.

Fazio, who had resisted calls to step down for months, arrived at the Bank of Italy headquarters for the meeting of the central bank's Superior Council, which was expected to formally accept his resignation. Fazio, who has denied any wrongdoing in connection with takeover bids for Italian banks, stepped down "with a clear conscience" and in the "greater interests" of the nation and the central bank, the Bank of Italy said.

Bank of Italy Director General Vincenzo Desario was expected to temporarily replace Fazio, who had served as governor since 1993. Names mentioned in Italian media as top contenders for the job have included Mario Monti, the former EU competition commissioner who was named last week by Goldman Sachs International as an international adviser.

Also cited was Mario Draghi, a former top treasury ministry official; Tommaso Padoa-Schioppa, whose term as a European central banker ended earlier this year; Vittorio Grilli, the treasury ministry's director general; and Desario.

Opposition leader Romano Prodi pushed in comments published in La Repubblica for a new bank chief to be selected soon to reassure international markets.

Lawmaker Daniela Santache, from a right-wing governing party, told Sky TG24 TV that she hoped Parliament would swiftly approve banking reform out of a sense of "responsibility to so many Italian savers."

Italy's central bank has vast surveillance and antitrust powers in the banking sector, and opposition leaders and consumer lobbies have been pressing for the antitrust powers to be taken away from the Bank of Italy and given to a separate authority, reports the AP. I.L.