Sweden’s ‘Mr. Fix-It’ Bank Bailout May Be Model for U.S., U.K.

Bo Lundgren almost didn’t make it past security on Nov. 10 when he first visited the Swedish bank his National Debt Office had just seized.

“I’m the one who owns Carnegie,” he said he told the guards as he brushed past them and marched into the bank’s headquarters.

Lundgren has made a career out of overcoming obstacles at financial institutions. In the 1990s, he pulled the largest Nordic economy out of a banking crisis as Sweden’s minister for fiscal and financial affairs, winning the respect of former Federal Reserve Chairman Alan Greenspan and foreign governments. Now he’s leading the way again, cleaning up Carnegie’s toxic assets, reselling the bank and recouping the state’s investment in just three months -- sparing taxpayers any losses.

His efforts to ensure that Sweden emerges intact from financial turmoil may be a prototype for other countries -- including Germany and the U.K. -- grappling with failed banks.

Governments should “try and do what Sweden did,” said economist Nouriel Roubini, a professor at New York University’s Stern School of Business, who called the country’s 1990s plan the model bailout: Take over troubled banks, “clean them up and reprivatize them. Fudging it, guaranteeing the assets or buying the toxic assets is not going to work.”

Federal Reserve Chairman Ben S. Bernanke said Feb. 25 the U.S. government doesn’t plan “anything like” a nationalization of banks that would wipe out stockholders.

http://www.bloomberg.com/apps/news?pid=20601109&sid=atrQkJTX1P50&refer=home