Once Again, Its Sweden Showing the Way + Sweden Proving Tough Love of Banks A Model For Debt Crisis

[stockholmer]

http://www.ritholtz.com/blog/2011/11/once-again-its-sweden-sweden-showing-the-way/?utm_source=dlvr.it&utm_medium=twitter

Over these past few years of watching Banks collapse, get bailed out, and then falter again, I have had a consistent take on the matter: The banking system is more important than any single institution; If you as a banker are so incompetent as to blow up yourself and your firm, http://www.ritholtz.com/blog/2010/10/darwins-corporate-survival/ you should not be saved; instead, prepackaged bankruptcy, a/k/a temporary nationalization, is the preferred route to protect the overall system.

The choices are stark: Emulate either Japan or Sweden. In the US, we have a hybrid (Perhaps we should call it Swedenese or Jaden).

The Swedish approach — Save the System! –is embodied in the FDIC, which has real dollars at risk as the insurer of depository accounts. They follow the Swedish model in that banks they determine to be insolvent are to be liquidated and or sold off top the highest qualified bidder.

The Japanese approach — Save the Banks! — is a result of their Keiretsu, http://en.wikipedia.org/wiki/Keiretsu and is the model embraced first by the Bush White House, and the Federal Reserve, than by Congress, and lastly by the Obama White House. I have argued this approach is in large part why the post-crisis economy has been so moribund, with sub-par GDP and Employment the rule.

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http://www.bloomberg.com/news/2011-11-09/sweden-prime-minister-proving-tough-love-of-banks-a-model-for-debt-crisis.html

Sweden’s bank rescue model has protected taxpayers, turned a profit and left the Nordic country less indebted than when the financial crisis started in 2007.

It’s the opposite of what’s happening in the U.K., where the government’s debt burden has doubled in the past four years and taxpayers are still footing the bill to bail out banks.

“In 2006, when I became prime minister, the U.K. and Sweden had the same ratio of national debt to gross domestic product,” Swedish Prime Minister Fredrik Reinfeldt, 46, said in an interview. “The U.K. has now doubled and Sweden has gone below 40 percent and this is linked to dealing with the banks.”

As lenders across the globe resist stricter regulatory controls they say will hurt earnings, Sweden’s commitment to enforcing rigorous standards has paid off. Companies like Stockholm-based Nordea Bank AB (NDA) are better capitalized than most of their European and U.S. rivals, and have better access to funding markets and a lower risk of default. Tougher controls enacted during the Swedish banking crisis of the 1990s also have protected the state budget, which will be in surplus this year.

“We introduced a lot of fees in the system, we increased transparency,” Reinfeldt said Nov. 8 during an interview in Stockholm’s Rosenbad, his Art Nouveau-style waterfront office building that used to be the headquarters of Nordiska Kreditbanken before it was acquired in 1917 by a local competitor. The corridors leading to Reinfeldt’s office are hung with pictures of Swedish cabinets going back to the 19th century.

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Sweden's finance minister Anders Borg urges Nordea customers to change banks

http://www.svd.se/naringsliv/borg-kritiserar-nordeas-lyahordhet_6622410.svd

http://translate.google.se/translate?hl=en&sl=sv&u=http://www.svd.se/naringsliv/borg-kritiserar-nordeas-lyahordhet_6622410.svd&ei=lzy8TsKyJ9GQ4gSwtsFA&sa=X&oi=translate&ct=result&resnum=2&sqi=2&ved=0CC8Q7gEwAQ&prev=/search%3Fq%3DAnders%2BBorg%2Bnordea%26hl%3Den%26biw%3D1424%26bih%3D694%26prmd%3Dimvnso

Finance Minister Anders Borg questions Nordea and its management responsiveness after Svenska Dagbladet's revelation of the purchase of a 22-million SEK apartment for the President: Borg calls on customers who do not have confidence in their bank to change.

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http://www.thelocal.se/37274/20111110/

Christian Clausen, CEO of Nordic banking giant Nordea, has responded to criticism of the bank's purchase of a 22.5 million kronor ($3.4 million) flat for him in Stockholm, saying that had they anticipated the outrage, they would have acted differently.

"We probably would have continued with a rental flat," he said to the Svenska Dagbladet (SvD) daily and confessed to be "shaken" by the protest storm engulfing Nordea.

Sweden's finance minister Anders Borg on Wednesday urged Nordea customers to change banks if the flat purchase had caused them to lose faith in the firm in which the Swedish state has an ownership stake. "What has happened doesn't increase confidence," Borg said at a press conference on Wednesday.

Svenska Dagbladet reported last week that Nordea had purchased the 256-square-metre flat in central Stockholm at a time when the bank is set to make around 2,000 staff redundant.

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[aquart]

1. So Clausen planned to fire 2000 and buy an apartment with the savings?

And he's shocked that people were upset? A real genius that man.