US learns lessons from Swedish banking crisis
TT/Peter Vinthagen Simpson · 20 Sep 2008, 14:40
Published: 20 Sep 2008 14:40 GMT+02:00
"I have been in the USA several times this year to explain what we did," said Bo Lundgren at the Swedish National Debt Office.
"There can be significant similarities," Lundgren added.
Lundgren was finance minister in the 1991 right-wing government and, together with current and former Riksbank heads Stefan Ingves and Urban Bäckström, was the architect behind the bank support committee (Bankstödsnämnden or Bankakuten) which did much to alleviate the crisis that raged in the Swedish banking system from 1990-94.
Several years of hysterical property and commodity speculation in the 1980s plunged Sweden into its worst financial crisis since the 1930s.
"There are significant similarities between the current American financial crisis and our own financial crisis at the beginning of the 1990s. It concerns a finance and property bubble that has lead to large losses in the the banking sector."
Lundgren argues, like the US president George Bush, that governments have a major part to play in such exceptional situations, adding that there is a good chance of reclaiming the money.
"The sums that we had to cover amounted to 60 billion kronor ($9.83 billion). But together with the resurrection of Nordbanken meant that by 1997 the outlay had been more than halved by reclamations," said Lundgren.
"And since then the state has probably been reimbursed all of the money. The money went primarily to Nordbanken and Gota Bank, which later merged, and to the liquidation firms Securum and Retriva.
Securum and Retriva's task was to take care of all the bad debt held by Nordbanken and Gota Bank.
The US treasury is reported by the BBC to be preparing a $800 billion fund to buy back a large proportion of US mortgage market debt. The intention is to store the debt in one organisation on behalf of the taxpayer until such time as they can be sold off.