I know nothing about the banking crisis and am trying to get it straight in my head. Please forgive me if I sound like a total idiot asking these questions.
I know that credit is essential for our economy. It is essential for our businesses to get a hold of credit to operate (keep jobs) and to expand (create new jobs).
I am curious as to why the banks were not allowed to fail and then the government pick them up for less than the cost of recapitalization. This way the government would own (at least one) it's own bank and could dish out all the credit it deemed necessary (within reason of course).
Am I right in assuming that the only reason this has not happened is because the banks would not fail immediately (if ever) and we would be in for years of frozen credit?
Why can't the state use it's latest nationalisation (Anglo) to dish out credit to the ailing small businesses? It couldn't be an infrastructure issue so why? If it's a matter of not having the correct capital ratio, surely the government could use the money it used to recapitalise BOI and AIB to capitalize IT'S OWN (THE TAXPAYERS) BANK? (as apposed to a privately held bank?)
Could the state not simply BUY a bank, say BOI, using the same taxpayer money it used to recapitalise it , sell off the non essential parts of it and start lending on it's own terms? Would this not achieve the desired stimulation effect?
I understand that being a banking simpleton I must have grossly oversimplified above. Please let me know where I'm going wrong in my thinking.
I know that credit is essential for our economy. It is essential for our businesses to get a hold of credit to operate (keep jobs) and to expand (create new jobs).
I am curious as to why the banks were not allowed to fail and then the government pick them up for less than the cost of recapitalization. This way the government would own (at least one) it's own bank and could dish out all the credit it deemed necessary (within reason of course).
Am I right in assuming that the only reason this has not happened is because the banks would not fail immediately (if ever) and we would be in for years of frozen credit?
Why can't the state use it's latest nationalisation (Anglo) to dish out credit to the ailing small businesses? It couldn't be an infrastructure issue so why? If it's a matter of not having the correct capital ratio, surely the government could use the money it used to recapitalise BOI and AIB to capitalize IT'S OWN (THE TAXPAYERS) BANK? (as apposed to a privately held bank?)
Could the state not simply BUY a bank, say BOI, using the same taxpayer money it used to recapitalise it , sell off the non essential parts of it and start lending on it's own terms? Would this not achieve the desired stimulation effect?
I understand that being a banking simpleton I must have grossly oversimplified above. Please let me know where I'm going wrong in my thinking.