Sweden's Advice on US Banks: Be Wise, Nationalize

Taxpayers eventually benefited from early '90s move to recapitalize busted system
By Matt Cantor,  Newser User
Posted Jan 23, 2009 8:38 AM CST
Bo Lundgren was Sweden's fiscal minister in the early 1990s.   (Scanpix)
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(Newser) – One option to save US banks: follow Sweden’s lead and nationalize them. Sweden’s banks were essentially bankrupt in the early 1990s, but a center-right government took them over, and taxpayers ultimately reaped the benefits, the New York Times reports. Troubled assets were isolated into a single “bad bank,” to be sold when the climate improved; meanwhile, tax dollars capitalized the banking system.

Now, Swedish leaders are saying the US should take a page from their book with a temporary bank takeover, instead of the equity-free bailouts thus far offered. “If you go in with capital, you should have full voting rights,” said the minister who oversaw the nationalization. But opponents worry US nationalization would be too complicated, poorly managed, and too expensive.