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Academic

: Conglomerate

When Will the Globe Get Around to Globalizing This Crisis Away?

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

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One the one hand, as the financial crisis gets global, I guarantee that you will see transnational policy being made via the informal global networks that the regulators must now rely upon.  On the other hand, with the G-7 statement ("we're taking this seriously!") being pretty small beer, it is worth noting the diversity of regulatory solutions adopted by global - and even European - regulators.

  • Britain is taking equity, or partially nationalizing, its banks.
  • Germany is doing an American-style maybe guarantees maybe capitalization blend: it is "considering a total bailout plan of ?300 billion to ?400 billion ($402 billion to $536 billion), which includes state guarantees and the option to get a direct stake in banks. As part of this, the government is mulling recapitalizing financial institutions by injecting ?50 billion to ?100 billion in capital."
  • The IMF is going to make fast loans to sovereigns - good news for Pakistan and Iceland
  • Ireland is going to guarantee deposits, FDIC style.
  • And the United States still hasn't decided what it is going to do ... so far it has been more deposit guarantees, some purchases, possibly some capitalization, and a case by case approach.  Maybe it's all about Morgan Stanley this weekend, but one expects a systemic approach, and perhaps sooner rather than later would be wiser?
  • Anyway, we await regulatory harmonization - and we are not seeing it yet.

(Hat Tip: Barry Ritholtz)

UPDATE: At the COB on Sunday, the Times is reporting that the Europeans, after a weekend of negotiating, now claim to be unified.  In doing bank rescues at least, and maybe in not going the Irish route on depositors.  But as for the rest ... we shall see....

Full post as published by Conglomerate on October 12, 2008 (boomark / email).

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