Free Republic

The EU’s bailout fund has moved closer to being able to directly pump money into troubled banks after the German government introduced a bill allowing direct bank recapitalization. The draft law will now require approval in the Bundestag, but is planned to enter into force in November. “This is an important step to stabilize our financial sector … and to increase further the trust in our common European currency,” said finance minister Wolfgang Schäuble on Wednesday (9 July). He added that the law would help “rule out the risk that the taxpayer would have to accept liability, as in the...

Europe's €30 trillion headache European banks have amassed €30 trillion in liabilities and face a serious funding threat over the next two years as authorities withdraw emergency support, according to a new report by Standard & Poor's. By Ambrose Evans-Pritchard, International Business Editor Published: 6:00AM BST 29 Jul 2010 The rating agency said banks are at risk of a vicious circle as sovereign debt fears and financial stress feed off each other. "Banking sector woes are eroding sovereign credit-worthiness, which is in turn reducing the real and perceived capacity of governments to support weak banks," said S&P. "The collective funding...

Global Banks Face $5 Trillion Credit Squeeze Wednesday, 21 Jul 2010 08:43 AM Article Font Size By: Dan Weil Banks across the globe had to raise trillions of dollars in capital as a result of the financial crisis, and now the bill for that borrowing is coming due. It’s not a pretty picture. Worldwide, banks must repay or roll over $5 trillion of debt to bondholders and other creditors through 2012, according to the Bank for International Settlements. “There is a cliff we are racing toward — it’s huge,” Richard Barwell, an economist at Royal Bank of Scotland, told The...

Need for action on the banking panic Published: September 25 2008 18:10 | Last updated: September 25 2008 18:10 Banks are not to be trusted. This is not just the view of the public and policymakers, but that of the banks themselves. Spreads on unsecured inter-bank lending have reached unprecedented levels, particularly in dollars and, to a lesser degree, sterling. Such stresses cannot continue for long, without serious damage to both the financial system and the economy. Something has to be done. The question is: what? Thursday’s spread over one month between the London interbank offered rate and future expected...