Comments on: Are Banks Too Big to Save? http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html Sun, 22 Nov 2009 00:12:22 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Amnon Portugaly http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18310 Amnon Portugaly Mon, 29 Sep 2008 20:10:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18310 The Scandinavian banking crises, in Sweden and Norway in 1990s are an excellent models of how a banking crisis should be resolved. <br/>Key features of the Norwegian banking crisis resolution:<br/>• Private solutions were explored before the government intervened.<br/>• Share capital was written down to zero before committing public funds. <br/>• The government acted swiftly to limit contagion, but did not provide a blanket guarantee.<br/>• Liquidity support was given to illiquid, but solvent institutions.<br/>• The government did not use an asset management company - as the other Nordic countries did later on. <br/><br/>Source<br/>A Norwegian perspective on banking crisis resolution by Kristin Gulbransen<br/>http://www.norges-bank.no/templates/article____13822.aspx The Scandinavian banking crises, in Sweden and Norway in 1990s are an excellent models of how a banking crisis should be resolved.
Key features of the Norwegian banking crisis resolution:
• Private solutions were explored before the government intervened.
• Share capital was written down to zero before committing public funds.
• The government acted swiftly to limit contagion, but did not provide a blanket guarantee.
• Liquidity support was given to illiquid, but solvent institutions.
• The government did not use an asset management company – as the other Nordic countries did later on.

Source
A Norwegian perspective on banking crisis resolution by Kristin Gulbransen
http://www.norges-bank.no/templates/article____13822.aspx

]]> By: Independent Accountant http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18290 Independent Accountant Mon, 29 Sep 2008 19:34:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18290 YS:<br/>I can't even read Larry Summers stuff anymore. Summers is a smart guy and knows he is putting out garbage. YS:
I can’t even read Larry Summers stuff anymore. Summers is a smart guy and knows he is putting out garbage.

]]> By: jkiss http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18234 jkiss Mon, 29 Sep 2008 16:20:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18234 IMO Paulson always intended to pick winners, e.g. Goldman. Maybe his plan is not so different from Sweden's. IMO Paulson always intended to pick winners, e.g. Goldman. Maybe his plan is not so different from Sweden’s.

]]> By: E http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18221 E Mon, 29 Sep 2008 15:23:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18221 LOL, Munchau forced to eat his words! LOL, Munchau forced to eat his words!

]]> By: Francois http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18210 Francois Mon, 29 Sep 2008 14:36:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18210 "Like Sweden, the US needs to shrink its financial sector before saving it. The difference is that the US needs to shrink it a lot more, and wants to shrink it a lot less."<br/><br/>Correction: The powers that be in the US _need_ the financial sector to remain big enough to keep the flow of campaign contributions coming their way.<br/><br/>Just take a look at which sector of the economy are the biggest donors to DC.<br/><br/>This also explains why the "bailout" plan is designed the way it is now.<br/><br/>Plus ca change... “Like Sweden, the US needs to shrink its financial sector before saving it. The difference is that the US needs to shrink it a lot more, and wants to shrink it a lot less.”

Correction: The powers that be in the US _need_ the financial sector to remain big enough to keep the flow of campaign contributions coming their way.

Just take a look at which sector of the economy are the biggest donors to DC.

This also explains why the “bailout” plan is designed the way it is now.

Plus ca change…

]]> By: Anonymous http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18205 Anonymous Mon, 29 Sep 2008 14:23:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18205 Speaking in ideas? Speaking in ideas?

]]> By: François http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18201 François Mon, 29 Sep 2008 14:02:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18201 <i>By the time European ministers have travelled for a meeting in Brussels, let alone reached or implemented a decision, the financial markets would have long melted.</i><br/><br/>I disagree here. Governments of the Eurozone members have direct access to international debt. I'd challlenge the ability of Italy and a couple of others (Greece?) to cope with massive desintegration of their banking system in view of their weak position. But this judgment is wrong for most of EC members. IMHO...<br/><br/>And Europe is much more at ease on those issues than Britain or the US. <b>Ideologically speaking</b> By the time European ministers have travelled for a meeting in Brussels, let alone reached or implemented a decision, the financial markets would have long melted.

I disagree here. Governments of the Eurozone members have direct access to international debt. I’d challlenge the ability of Italy and a couple of others (Greece?) to cope with massive desintegration of their banking system in view of their weak position. But this judgment is wrong for most of EC members. IMHO…

And Europe is much more at ease on those issues than Britain or the US. Ideologically speaking

]]> By: Anonymous http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18199 Anonymous Mon, 29 Sep 2008 13:59:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18199 SIFMA Analyst Call<br/><br/>http://www.filesavr.com/sifma<br/><br/>give the URL to your Representative SIFMA Analyst Call

http://www.filesavr.com/sifma

give the URL to your Representative

]]> By: dearieme http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18200 dearieme Mon, 29 Sep 2008 13:59:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18200 Do you mean, Matt, that you reckon that you have fewer "very talented asset managers" per head of population than the Swedes? Is that plausibe? The Swedes are blondes. Do you mean, Matt, that you reckon that you have fewer “very talented asset managers” per head of population than the Swedes? Is that plausibe? The Swedes are blondes.

]]> By: Matt Dubuque http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save.html#comment-18193 Matt Dubuque Mon, 29 Sep 2008 13:37:00 +0000 http://www.nakedcapitalism.com/2008/09/are-banks-too-big-to-save/#comment-18193 Matt Dubuque<br/><br/>A couple of points about the Swedish model may prove helpful. I have not previously embraced that model (even though it was wildly popular among bloggers) because it was by no means clear how it would be scaled up.<br/><br/>Note that Jan Kvarnstom, a former CEO of Securum (which was the agency in charge of all this) has stated that:<br/><br/>"You have to get your hands on the underlying assets quickly, get control over the cash flow and MANAGE THE ASSETS TO ADD VALUE TO THEM. It is very important to prove your professional credentials in the market and NOT to be seen simply as an asset dump."<br/><br/>The Swedes were very talented asset managers. That is how they saved money to the Swedish taxpayers. ADDING value.<br/><br/>That approach would have to be massively scaled up to succeed in the USA. How we would obtain the thousands of brilliant asset managers, actively ADDING value to do this is by no means clear to me.<br/><br/>Matt Dubuque<br/>mdubuque@yahoo.com Matt Dubuque

A couple of points about the Swedish model may prove helpful. I have not previously embraced that model (even though it was wildly popular among bloggers) because it was by no means clear how it would be scaled up.

Note that Jan Kvarnstom, a former CEO of Securum (which was the agency in charge of all this) has stated that:

“You have to get your hands on the underlying assets quickly, get control over the cash flow and MANAGE THE ASSETS TO ADD VALUE TO THEM. It is very important to prove your professional credentials in the market and NOT to be seen simply as an asset dump.”

The Swedes were very talented asset managers. That is how they saved money to the Swedish taxpayers. ADDING value.

That approach would have to be massively scaled up to succeed in the USA. How we would obtain the thousands of brilliant asset managers, actively ADDING value to do this is by no means clear to me.

Matt Dubuque
mdubuque@yahoo.com

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