“someone has all our money – now give us more”
“Das Transnational Institute beziffert die Kosten auf mindestens 747 Milliarden Euro und kritisiert, dass die Wirtschaftsprüfungsgesellschaften für ihre früheren Fehler noch belohnt werden…”Das Geschäft mit Bankenrettungen” In einer aktuellen Analyse beziffert das “Transnational Institute” die Kosten der angeglich “alternativlosen” Bankenrettung auf mindestens 747 Milliarden Euro, die die europäischen Steuerzahler meist durch Erhöhung von Staatsschulden und mit jährlich immer neuen Zinszahlungen bestreiten mußten. Dazu kommen noch über 1,2 Billionen für Bürgschaften und Garantien. Read More »
‘Failing or likely to fail?’
‘Barely a year after its launch, a new European law that was supposed to put an end to bank bail-outs looks set to be failing already.
20 billion Euro. This is the total size of the cheque the Italian government is getting ready to sign, once again, to bail out Monte dei Paschi, the country’s third-largest bank, and possibly several other of the country’s ailing lenders. A drop in the ocean considering Italy’s public debt, which now stands at an eye-watering 2,224 billion Euro. And still, the bill would amount to some 334 EUR for every man, woman and child in the country. Ten years after the onset of the global financial crisis, taxpayer-funded bank bail‑outs could be back with a vengeance. How did this come to pass?
Since the beginning of 2016, a new European law ‒ the Bank Recovery and Resolution Directive ‒ has been in force to stop governments, once and for all, from bailing out big banks with taxpayers’ money arguing that they were “too big to fail”. The objective was clear: like any normal company, banks that fail should be liquidated. Banks that are too big to be liquidated in one fell swoop should be restructured and/or wound up at their investors’ expense, a process known as “resolution”. No longer should taxpayers foot the bill for bankers’ mistakes. If this sounded too good to be true, it probably was.
“The political appeal of protecting a large bank from being put into resolution is obvious.”
The new law already had some exceptions built in, allowing politicians to protect a bank from being wound up if its demise was likely to cause serious problems for the wider economy. To qualify for a taxpayer-funded rescue – or “precautionary recapitalisation” – that bank would, however, need to be fundamentally healthy and able to prove that its need for government support is only temporary. Moreover, it was made explicit that public funds could not be used to cover losses that have already occurred or which are expected to crystallise in the near term. Now experts across Europe question whether Monte dei Paschi, which is now on its third state-funded bail-out (after 2009 and 2012), complies with these criteria. By contrast, the European Central Bank – which is responsible, together with the Single Resolution Board, for ordering the bank to be restructured or wound up – appears to be satisfied it does. It will be up to the European Commission now to judge whether the Italian government’s rescue plan complies with State Aid rules. Regardless of whether or not that plan will ultimately pass muster – it looks as if the EU’s new legal framework for dealing with failing banks has been deftly sidestepped at its first big test.’
The financial crisis has shown that there is a significant lack of adequate tools at Union level to deal effectively with unsound or failing credit institutions and investment firms (‘institutions’). Such tools are needed, in particular, to prevent insolvency or, when insolvency occurs, to minimise negative repercussions by preserving the systemically important functions of the institution concerned. During the crisis, those challenges were a major factor that forced Member States to save institutions using taxpayers’ money. The objective of a credible recovery and resolution framework is to obviate the need for such action to the greatest extent possible.