Government swoops in – Medford News, Weather, Sports, Breaking News

Mail Tribune (Medford, OR — Wayback)

2009-02-09

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Government swoops in Feb 09, 2009 12:00 AM A A History offers a recipe for nationalizing banks: Do it as a last resort, but don't dawdle, don't mix politics and banking, and get out of the business as soon as possible. Credit Lyonnais France Year of nationalization: 1945 Resolution: Privatized in 1999 Final cost: $19 billion Summary: The bank retained considerable autonomy until a lending spree that began in the late 1980s soured in the early 1990s. The cost of the necessary rescue cured the government of its desire to own the company. Verdict: Public ownership was bad for business. Continental Illinois United States Year of nationalization: 1984 Resolution: Privatized in 1991 Final cost: $1.1 billion Summary: The nation's 7th-largest bank grew through aggressive lending to energy companies and other businesses. Rising defaults forced a series of bailouts ending with the government taking an 80 percent stake. Verdict: Critics say unnecessary nationalization damages economy. Nordbanken and Gota Sweden Year of nationalization: 1992 Resolution: Privatized in 1995 Final cost: $2.7 billion Summary: The collapse of a real-estate bubble forced Sweden to nationalize two of its largest banks. It created bad banks to house their troubled assets, merged the remnants and privatized the new company. Verdict: The poster child for nationalization. Long-Term Credit Bank Japan Year of nationalization: 1998 Resolution: Privatized in 2000 Final cost: $1.9 billion Summary: The massive bank was immobilized by massive losses on commercial real estate loans and stayed that way for almost a decade before the government intervened decisively. Verdict: Once the government acted, it worked. Northern Rock United Kingdom Year of nationalization: 2008 Resolution: N/A Final cost: N/A Summary: One of the country's largest mortgage lenders lost access to funding as defaults rose, forcing the British government to take "temporary" control. Verdict: The jury is still out.