Belgium's Dexia SA to be nationalized

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    Oct 10, 2011 2:14 PM GMT
    Another tragedy in the continuing worldwide financial crisis.

    http://online.wsj.com/article/SB10001424052970203633104576620720705508498.html

    An interesting snippet from the article

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    Dexia, created in 1996 from the merger of Belgian and French government-lending banks, grew into one of the world's largest public-finance banks. It lent to local governments from the U.S. to Europe to Japan, amassing a portfolio of loans and bonds that reached €650 billion in 2008. That was many times the size of its relatively small customer-deposit base centered in Belgium, Turkey and Luxembourg.

    Regulators allowed Dexia's lending to grow unchecked using large amounts of wholesale funding—funding from financial markets rather than from individual customers' deposits—a business model they now acknowledge poses major financial risks. When the crisis hit in 2008, the bank needed a bailout. Its debts were guaranteed, and Belgium, France, Luxembourg and Belgian regional shareholders injected €6.4 billion of new capital into the bank.


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    Oct 10, 2011 3:07 PM GMT
    Columbusite777 saidAnother tragedy in the continuing worldwide financial crisis.

    http://online.wsj.com/article/SB10001424052970203633104576620720705508498.html

    An interesting snippet from the article

    ...

    Dexia, created in 1996 from the merger of Belgian and French government-lending banks, grew into one of the world's largest public-finance banks. It lent to local governments from the U.S. to Europe to Japan, amassing a portfolio of loans and bonds that reached €650 billion in 2008. That was many times the size of its relatively small customer-deposit base centered in Belgium, Turkey and Luxembourg.

    Regulators allowed Dexia's lending to grow unchecked using large amounts of wholesale funding—funding from financial markets rather than from individual customers' deposits—a business model they now acknowledge poses major financial risks. When the crisis hit in 2008, the bank needed a bailout. Its debts were guaranteed, and Belgium, France, Luxembourg and Belgian regional shareholders injected €6.4 billion of new capital into the bank.


    ...


    The wonders that come out of guaranteeing debts!
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    Oct 10, 2011 3:36 PM GMT
    @ mocktwinkie
    -Tell me about it! And loaning out 650 billion Euros to various countries even though the company has nowhere near the funds to 'guarantee' that amount. When things like this happen, I feel less and less sorry for the heads of these companies. I understand that taking a risk is a part of ANY business, but taking a risk like this and worth this much is sheer stupidity and greed.
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    Oct 10, 2011 5:16 PM GMT
    Columbusite777 said@ mocktwinkie
    -Tell me about it! And loaning out 650 billion Euros to various countries even though the company has nowhere near the funds to 'guarantee' that amount. When things like this happen, I feel less and less sorry for the heads of these companies. I understand that taking a risk is a part of ANY business, but taking a risk like this and worth this much is sheer stupidity and greed.


    It's going to get a lot worse. Most of the banks in Europe are effectively insolvent and this is in no small part because of investments made in countries like Greece - but these are self inflicted wounds. The reality as well is that France also doesn't actually have the money to pay for these defaults.
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    Oct 10, 2011 8:19 PM GMT
    The argument that the entire European banking sector is insolvent - the costs of the liberal dream?
    http://www.elliottwavemarketservice.com/2011/10/entire-european-banking-system-insolvent/