The Swedish Version of TBTF Tax
Today’s must read article is in on the Swedish model of crisis repair:
“When it comes to rescuing banks, the Swedes are earning a reputation as trendsetters. First they set a standard for recovering from disaster; now they want to export their idea for how to pay for it.
The country went through its own crippling banking crisis during the early 1990s, after the bursting of a domestic credit bubble. It rebounded relatively smoothly through an aggressive bailout policy built around nationalization and carving the troubled assets of banks off into a so-called bad bank.
That blueprint was followed to varying degrees over the last year or so in the United States [WTF?], Japan [Really?], Britain, the Netherlands and other countries.
Now, others are looking at Sweden’s latest idea to protect its lenders, enacted at the end of 2009 — a “stability fee,” or direct tax on banks so that they pay for their own bailouts. . .”
Good stuff . . .
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Source:
Swedish Bank Fee Sets Example for America
MATTHEW SALTMARSH
NYT, January 22, 2010
http://www.nytimes.com/2010/01/22/business/global/22levy.html
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January 22nd, 2010 at 12:02 pm
I give the Swedes some credit for identifying proper means of draining blood as efficiently as possible from zombie banks. Natural engineers, they are. You have to keep Frankenstein alive and walking in order to get anything in return.
Sure, i’m for it. If we are gonna have zombies strolling around our banking industry, lets apply a little IKEA methodology to it.
January 22nd, 2010 at 2:41 pm
Check out some Pan-Euro research on the Swedish banks and tell us what you think then — when you see how much their Capital levels are below global standards due to losses in Eastern Europe … check out their CDS levels
January 22nd, 2010 at 5:19 pm
go sweden, it’s your birthday, go sweden…
January 22nd, 2010 at 7:54 pm
The Swedes have (so far) the best response to bank crisis! But for a fix, why not look to a system that has never blown up since its inception in 1795 … Danish covered bonds anyone ? I would love if Barry did a piece on that!
“The first Danish mortgage bonds date back more than
200 years to the period after the Copenhagen Fire of 1795
which left a huge need for finance for the reconstruction.
Throughout its long history, the Danish mortgage regime has
never caused bondholders any losses as a result of a payment
default.”
http://www.nykredit.dk/marketsdk/ressourcer/dokumenter/pdf/NYKR_DanishCoveredBonds_WWW.pdf
January 23rd, 2010 at 7:03 am
even though banks were profiteering heavily from government bailouts and the lax regulatory situation in the run up to the crisis, i honestly believe that if you scratch under the surface, taxing banks is missing a very important point – rates were too low for too long a time (ie greenspan et al have not done their job), regulation has been very lax (where was the SEC in the last 6-7 years?) …
i’m not saying that banks are not to be held liable for what they did, but if you tax the banks you implicitly discharge the central bank’s and the regulator’s responsibilities in the crisis…
politically though it’s very easy to blame the banks … they’re an already very well established scapegoat with the broader public … obviously it’s not so easy to accuse the central bank or the regulator
think about it
January 23rd, 2010 at 7:06 am
ah yeah, and how are you going to tax those who were taking as much or even more risk as the banks, ie the shadow banking system??
January 25th, 2010 at 6:37 am
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