Spain tries a TARP. From the Financial Times: Spain announces emergency fund
- Spain on Tuesday became the latest European nation to take unilateral measures to deal with the world’s deepening financial crisis, announcing a €30-50bn emergency fund to provide liquidity to the financial system by buying Spanish bank assets.
...
The fund, whose details will be fleshed out during the regular cabinet meeting on Friday, will be managed by the Spanish treasury to buy the assets of financial institutions.
And in the UK, from The Mail: Rescue package for Britain's banks agreed at crisis summit after shares go into freefall
- The Government will tomorrow unveil a dramatic rescue package aimed at easing the crisis engulfing Britain's banks.
Gordon Brown tonight held a crisis summit with the governor of the Bank of England and the chairman of the Financial Services Authority as pressure mounted on ministers to take immediate action.
...
It is believed the package will include a proposal to inject capital into the banks to shore up their balance sheets.
emphasis added
From The Times: British taxpayer to be tied into £50bn bank bailout
- Britain’s taxpayers will tomorrow be committed to spending more than £50 billion to bail out the high-street banks in a bid to avert a cataclysmic failure of confidence, The Times learnt tonight.
...
The taxpayer will take a stake in banks that seek assistance through the purchase of preference shares ... Holders of preference shares are first in line for payout of dividends but they do not carry voting rights. The bail-out is expected to be structured so that the Government also receives rights to ordinary bank shares at low prices, holding out the prospect of profits if and when banks recover.
...
The part-nationalisation of the banks [will be called] “recapitalisation” ... the term used by Mr Darling ...
Mr Darling confirmed that he would be making a statement before the London Stock Markets opened tomorrow and another in the Commons later. It is believed the first will come at around 7.30 am.
That is 2:30 AM ET.
This is the type of plan supported by most economists in the U.S. (as opposed to Paulson's TARP). Krugman notes: Britain leads the way?
- Unlike the Paulson plan, this sounds as if it makes sense. However, given the strong financial linkages among the world’s economies, I wonder how much Britain can do on its own. Let’s see what the plan actually looks like; if it’s good, it can be a model for US emulation, and for the eurozone too if they can get their act together.
Related Posts :
- German Gov Guarantees All Private Savings Accounts
- European's Banks Leverage
- Why Europe's Banks are in Trouble?
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