The Proposed Aggregator Bank is A Trojan Horse for the New ‘United States’
Five Months after US Treasury Sec. Paulson asked for TARP Funds (and at this writing not having used not a dime to buy toxic assets), he now proposes yet another solution — A new US Government Owned “Aggregator Bank.” [1] While this idea comes not from the RTC but from the Swedish Banking Crisis of 1990–1993, it has the potential to go far afield of its stated purpose.
Sweden’s bank crisis began with Swedish bank deregulation in the late 1980s. Deregulation rapidly eased credit. Easy credit allowed intensive investment in Swedish real estate. Like our (US) recent housing bubble, Swedish real estate prices soared in the late 1980s. As easy credit pushed prices higher Swedish banks loaned more krona against quickly appreciating hard Swedish real estate assets. When the Swedish real estate market collapsed the asset “values” deflated quickly. Swedish borrowers and their creditors, the Swedish banks, found themselves suddenly illiquid. [2] Does this sound vaguely familiar?
Sweden eventually mopped up the mess, but it cost them 2% of their entire GNP for a number of years. One of the RTC similar vehicles Sweden used in its bank/credit disaster cleanup was a toxic asset holding bank called Securum. “Securum was the Swedish state company founded in 1992 during the financial crisis in Sweden 1990-1994 for the purpose of taking on and unwinding bad debts from the partly state-owned Nordbanken bank.” [3] Securum, like the former (now dissolved) RTC, completed it assignment and was dissolved in 1997. [4]
