Bank Bailout, Italian Style

Italy has nationalized Monte dei Paschi di Siena, a major bank that otherwise would have gone into bankruptcy. In the process, the bank’s €26.8 billion ($32.5 billion) “nonperforming loans” will be “disposed of,” and the Italian government taxpayers will feed the bank €5.4 billion and get a 70% stake in the failing bank.

Under the bad loan disposal plan, €26.1 billion will be bundled and sold at 21% of gross book value, the vast majority to the government-organized Atlante II fund, while the bank retains 5%.

This is the third time Monte dei Paschi had gotten capital injections, and for some reason, the men of the Italian government thinks this third time will be the charm.  Of course, that’s an easy choice for them to make; it’s not their money being used in this risk.  It’s the Italian taxpayers’ money being cavalierly gambled.

No, instead the bank’s creditors and other investors should be the only ones on the hook; they’re the ones whose money is at stake, and they’re the ones whose management oversight was…absent.

1 thought on “Bank Bailout, Italian Style

  1. The Banksters strike once again? At least in this case the errant culprit has been Nationalized… so long as the EU allows it to transpire.
    So the Italian government (citizens?) will have a majority control. The Banksters will most likely forge a sweet deal to remain at the table. All perks, bonuses (for what?), pensions and gilded parachutes intact. The government will likely state “We require their expertize.” A solid partnership of ineptitude will be formed.
    Is this the proverbial Black Swan that foretells the collapse of the global house of cards?
    Maybe the G20 can put this issue on the table. Make that grand conclave even more useless and dangerous this week. I’m sure they can easily resolve the situation… take the cash from the taxpayers and account holders. Surely institute negative interest rates. Make the commoner pay for our plutocracy.

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