Word: deal
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Even for a proud old bank like Belgo-Dutch giant Fortis, with nearly 300-year-old roots and Catherine the Great among its historic clients, playing a role in last fall's $100 billion takeover of Dutch rival ABN Amro was a big moment. In the largest financial services deal ever signed, Fortis - part of a consortium alongside the Royal Bank of Scotland (RBS) and Spain's Santander - put up $34 billion in return for ABN's Dutch banking business, among other assets...
...late Sunday at the latest, it was obvious that Fortis had committed a catastrophic folly. Less than a year after the blockbuster deal, the Belgian, Dutch and Luxembourg governments agreed to inject $16 billion into an ailing Fortis, laid low by ongoing uncertainty in global credit markets. In return for the lifeline, each of the three Benelux governments took a 49% share in Fortis' banking units in their own countries. The part-nationalization of Belgium's biggest lender, which, with a worldwide staff of 85,000, is Europe's largest to be bailed out so far since the credit crisis...
Supporting the bill wasn't easy for lawmakers on either side of the aisle. As the deal was being worked out last week, congressional offices were reporting that constituent phone calls were running 100 to 1 against the measure, which was seen across the country as a bailout of the very Wall Street executives whose misjudgment in making and selling bad real estate investments had spawned a credit crisis that threatens to drag down the entire financial system...
Meanwhile, the McCain campaign - which had been taking credit for the deal, when it appeared to be headed for passage - put out a statement blaming its failure on Democrats, starting with Barack Obama. "Barack Obama failed to lead, phoned it in, attacked John McCain, and refused to even say if he supported the final bill," the campaign said in a statement attributed to economic adviser Doug Holtz-Eakin...
...what happens now? On Capitol Hill, House leaders said they'll try again soon. Treasury Secretary Henry Paulson practically begged for a revised deal in his brief appearance after the market carnage. "Our tool kit is substantial but insufficient," he said. The market's traumatized reaction today may change some minds and some votes...