"The European Way"
Europe is seeing its share of financial system problems, but governments over there seem to be looking to nationalizations as the solution, rather than having governments overpay for bad assets:
- “[T]the Belgian, Dutch and Luxembourg governments announced Sunday a partial nationalization of the Belgian-Dutch financial conglomerate Fortis, involving a combined injection of 11.2 billion euros, or $16.1 billion, from the three governments, which took a 49 percent stake.”
- “Meanwhile, the British Treasury on Monday confirmed that it had seized the lender Bradford & Bingley — the third British bank to tumble this year — after no private buyers emerged.”
- “Separately, the Icelandic government said that it had taken control of Glitnir, one of the largest lenders in the country, after it encountered liquidity difficulties.”
The transatlantic contrast will, perhaps, provide some lessons for the future. Meanwhile, here’s Nouriel Roubini on why recapitalization through takeovers is preferable to buying toxic (sorry, “troubled”) assets.