EU Official: Bank Bailouts Remain Possible

The vice president of the European Commission has said that taxpayer-funded bank bailouts remain a possibility if the current round of stress tests of Europe's biggest banks reveal significant capital shortfalls — or if Europe's debt crisis were to really flare up again.

However, Joaquin Almunia repeated that the governments' preferred method remains to force investors such as shareholders, bondholders and ultimately depositors, to pay first.

Speaking at a conference in London, Almunia said Tuesday that bank investors, including depositors, "logically" want more information about the risks they face.

He said that "if financial stability were at risk," public money can be used to save a bank immediately. However, the Commission would still impose losses on investors in the end — and order executive pay at any bailed-out bank capped.