Paulson de ends a di erentiated approach

The Japan makes its model Bank rescue plan

At the time where US Secretary o the Treasury, Henry Paulson, re lects on the di erent ways to inject capital into banks, his Japanese counterpart, Shoichi Nakagawa, intends to share the experience o his country. At the end o the 1990s, to a oid bankruptcy banks and reduce systemic risk, the Japanese State is in ested the equi alent o $ 80 billion. Support or major banks, once restructured and merged, to repay the amounts recei ed. It was not simply to inject capital into the banks, but also sit on the Board o Directors and to determine di idend policy. It was the only way to Tokyo, to deli er sustainable on the rails o the ragile institutions. Despite initial ears ne er ind the amount injected, the plan inally worked well, because practically all institutions o the place ha e, to date, paid the amounts recei ed. It is a point o pride in the eyes o the Japan who wants to make a uni ersal model o its bailout o the banks. "The Japan say in G7 e erything he has to say", Shoichi Nakagawa has launched a ew days ago. The Japanese Minister o inance has also emphasized that the 700 billion Paulson plan are necessary but insu icient.

Paulson de ends a "di erentiated approach".

Coordination does not mean "consistent remedies." It was a little line o US Treasury Secretary, Henry Paulson, on the e e o the meeting o Ministers o the G7. While arguing or "cooperation" and coordination strengthened collecti e action o the arious States, the Secretary o the Treasury iew that approaches must be di erentiated depending on the country. A ter the e ect mixed concerted lower rates o interest between central banks, is not prepared, in particular, to join the British proposal to extend the guarantees or interbank lending.

"We must take care to ensure that our actions are closely coordinated and communicated with the initiati e o a country is not made at the expense o others or the stability o the system as a whole," said Henry Paulson. Con inced that the crisis will not end quickly, considers that "the con idence o in estors remains critical to restore liquidity and strengthen the stability o the inancial system." This does not mean that all countries must adopt the same measures. "This would not make sense to ha e identical policies." This does not preclude the Treasury today build on the British model o direct inter ention in the capital o banks.

The Germany or more lexible accounting rules

In a letter to Henry Paulson, the Minister o German inance, Peer Steinbrück, listing eight subjects which are o primary importance. Its priority is to pro ide inancial institutions greater lexibility in the application o the accounting rules, including the closing o the accounts o the third quarter, which must be published next week. Peer Steinbrück welcomes the decisions already taken by the SEC and hope a similar mo ement in Europe. He then wants to orce banks to keep the most inno ati e inancial products in their balance sheets so that they can no longer, in the uture, around the prudential rules.

Peer Steinbrück wishes to also require at least retain 20 o the debts that they securitize. It calls or an international agreement on the prohibition o certain mechanisms or short selling, which contribute to the downward spiral. He also wants a decision at the international le el on golden parachutes and the responsibility o the o icials guilty o mismanagement. In parallel, the German inance Minister belie es an urgent need to re orm the pay and reward systems in high inance. It also, o course, calls or better coordination o super isory authorities.

The rance wants to coordinated actions

The rance appro ed the plan or recapitalisation o the English banks, and has itsel participated in the rescue o Dexia by creating a State ad hoc society. Howe er, it considers not necessary to systematize this approach, the rench banks ha e no problem o sol ency. Same thing or guarantee o the rule, ad hoc, made to Dexia or its loans, then that Gordon Brown calls on G7 and the European Union to ensure o erall loans between banks. The economy Minister, Christine Lagarde, will continue to call or a coordinated European approach characterized by national solutions adapted to the necessities o each. It maintains its doctrine that the authorities "will not lea e all inancial institutions" and that no institution will be bankrupt. It regrets this error "drama" that was the US decision to let Lehman Brothers ail. The g-7 should also be an opportunity to ad ocate a re orm o the market and practices o accounting standards at the international le el, as it had claimed Nicolas Sarkozy. And to strengthen the role o the IM or the monitoring o inancial mechanisms.

London leads to the rescue o the interbank

or the British leaders, time o proselytism has sounded. Alistair Darling, the inance Minister, lew to Washington with high hopes to encourage his counterparts rom the G7 to emulate the concocted by the Brown Go ernment rescue plan to support their own banking system. In particular, London leads to a general guarantee o the States plan to restore con idence on the interbank markets and bond, rozen since the bankruptcy o Lehman Brothers. Satis action was last, yesterday in London, a ter the statements o Henry Paulson, that Washington is preparing injections with a capital o us banks. "Other countries watching what we do", welcomed, yesterday, Gordon Brown, British Prime Minister, who hears him, remain in close contact with its European neighbours, be ore the Brussels Summit, next week. London, which has committed 500 billion pounds to help RBS and other HBOS, wants to see other States ollow his path, otherwise the British e ort might remain insu icient.