Word: bankses
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Early last Winter, when the west was suffering the first casualties of the credit crisis, sovereign wealth funds (SWFs) rode to the rescue, providing over $40 billion in capital to some of the largest of the faltering U.S. and European banks. The U.S. government - reluctant to bail out banks directly...
As mortgage losses continued to mount and the credit-crisis snowball rolled on, private equity, with some SWF support, took on the role of recapitalizing regional banks. Yet there's still no end to the crisis in sight. On July 11, U.S. regulators shut down IndyMac Bank, the second-largest...
One nonobvious answer is: the central banks of emerging economies. To keep their currencies from appreciating too much against the dollar, emerging nations continue to buy increasingly large amounts of U.S. debt. This provides the U.S. with an indirect funding source to prop up its banks and brokerages, but it...
Possibly - but SWFs may want better deals. In the first round of recapitalization, SWFs took small (less than 10%) stakes in financial giants including UBS and Citigroup by purchasing preferred or convertible shares without voting rights. In return, the funds got fairly high interest payments and the chance to buy...
It remains to be seen whether U.S. authorities will be comfortable with SWFs taking larger stakes. Consider that while the U.S. is aggressively pushing China to open up its banking system and financial markets to U.S. companies, regulators have been reluctant to issue licenses for Chinese state banks to open...