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It did happen in the UK. Banks that took bailouts traded shares for cash with the Treasury (this is a layman's understanding at least). RBS notably became 84% p

It did happen in the UK. Banks that took bailouts traded shares for cash with the Treasury (this is a layman's understanding at least). RBS notably became 84% publicly owned. The real scandal is the government selling back the shares for less than they paid for them (when RBS was on the brink of collapse).

joey_bob 7y ago
Did the Treasury improve the bank operations for the better? It’s difficult to imagine that they’d do the same jobs as private creditors, considering 1. The Treasury decision makers stake in the longer term performance of the banks is low 2. The Treasury has money as an institution of government, even in a downturn, and has come to possess through political means. Private creditors have some come to possess, and more importantly keep/remain solvent during a downturn, the money they have to lend through means and methods more closely related to the effective operations of the banks. Not that every private creditor who ended up in control would do a better job, but on the whole firms would be more effectively run in the long term. Especially when it comes to avoiding risky leveraging situation as we’re in now. Not a britbong, so my understanding of how everything works over there might be wrong
- EdwardDiego 7y ago
  I respectfully disagree with point 1 - our Treasury, at least, which I imagine works along similar lines to the HM Treasury, realises the important social role healthy, and well-capitalised banks play.
rmrfstar 7y ago
A piece is missing. RBS creditors were not "bailed-in" by having their debt converted to equity. Instead, they were offered guarantees (functionally, though not in name). RBS was a classic bail out. Creditors were fully protected, and shareholders retained a substantial interest in the surviving entity (in this case 20%). [1] https://www.theguardian.com/business/2010/aug/06/royal-bank-of-scotland-profits-analysis https://www.theguardian.com/business/2010/aug/06/royal-bank-...

joey_bob 7y ago

Did the Treasury improve the bank operations for the better? It’s difficult to imagine that they’d do the same jobs as private creditors, considering 1. The Treasury decision makers stake in the longer term performance of the banks is low 2. The Treasury has money as an institution of government, even in a downturn, and has come to possess through political means. Private creditors have some come to possess, and more importantly keep/remain solvent during a downturn, the money they have to lend through means and methods more closely related to the effective operations of the banks. Not that every private creditor who ended up in control would do a better job, but on the whole firms would be more effectively run in the long term. Especially when it comes to avoiding risky leveraging situation as we’re in now. Not a britbong, so my understanding of how everything works over there might be wrong

EdwardDiego 7y ago
I respectfully disagree with point 1 - our Treasury, at least, which I imagine works along similar lines to the HM Treasury, realises the important social role healthy, and well-capitalised banks play.

rmrfstar 7y ago

A piece is missing. RBS creditors were not "bailed-in" by having their debt converted to equity. Instead, they were offered guarantees (functionally, though not in name). RBS was a classic bail out. Creditors were fully protected, and shareholders retained a substantial interest in the surviving entity (in this case 20%). [1] https://www.theguardian.com/business/2010/aug/06/royal-bank-of-scotland-profits-analysis https://www.theguardian.com/business/2010/aug/06/royal-bank-...