The Bankwatch

Tracking the consumer evolution of financial services

A future that has hope for banking innovation only in North America?

In something that is a bit ironic, the Democratic US government is looking the most conservative in management of banks amongst the G-7 scheduled next week in Italy.  Geithner is also looking the most thoughtful of the finance ministers, alongside Lagarde in France.

This is seriously not a time for grandstanding as Brown and Darling continue to do too often.  Time to get it right with a sustainable approach that will not relegate banks to becoming permanent financial utilities which I fear is happening when you read this dire summary of the current state.

Could we have a system in the future that has the private (and presumably innovative) banks existing only in North America?

Question of control over banks awaits Geithner at upcoming G-7 meeting | IHT.com

Ireland injected €7 billion, or $9 billion, into its two largest banks Wednesday. In return, it gained the right to appoint four directors, limit executive pay, set lending parameters, require the suspension of home foreclosures, as well as an option to buy a 25 percent equity stake at fire sale prices some time in the future. The government already owns 75 percent of Anglo Irish bank.

In Britain, four of the most troubled financial institutions — two of them were officially nationalized — are already under the de facto control of a newly formed government holding company.

Officials are pushing Lloyds Bank and the Royal Bank of Scotland, among others, to pare bonuses and increase lending to British homeowners and businesses.

Both countries’ actions conform to a growing sense in Europe that the best way to revive banks is to put them on the tightest possible leash. But in an interview in advance of the Friday and Saturday G-7 meetings, a senior Treasury official reiterated that the Obama administration is committed to the proposition that banks must remain in private hands.

Written by Colin Henderson

February 13, 2009 at 16:55

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