The state put 360 billion on the table to save banks

A weighted President to appease the banks. This is Nicolas Sarkozy of a new kind who presented the anti-crisis fiscal French plan. Calm, collected. In this time of major economic turbulence, the man responsible State succeeded the turbulent political beast. So much for the form. In the background, there is a number to remember, plump: 360 billion euros. The state provides a “pay” guarantee interbank loans up to 320 billion euros and spends up to 40 billion euros to recapitalize banks that are in trouble.

Noting that “nothing should be spared to prevent the crisis is aggravated” and that “money does not circulate,” the Head of State announced these exceptional measures, which are the French implementation of the plan adopted Sunday by the 15 countries of the Eurogroup.

This guarantee interbank lending “will apply to loans contracted before 31 December 2009 and for a period of up to five years, announced Nicolas Sarkozy. Secured debt will take priority over all other debts in the event of borrower default setting. ”

For this purpose, “a company will be created,” announced the President, without specifying the precise contours, and “loans issued by the company for funding will be guaranteed by the state.” But this will not happen “without compensation”, he warned. “The guarantee will be paid at a normal market price. She will return to the signing of an agreement laying down the obligations of the recipient institutions. ”

These “bonds initially will focus on ethics, including the issue of compensation,” not to reproduce “the scandalous excesses observed in recent years.” An allusion to the golden parachutes granted to executives of large companies after their departure.

The obligations also concern “funding from individuals, businesses, SMEs and local authorities.” The state guarantee should be used to “prime the credit pump and not to fuel a precautionary hoarding,” warned Nicolas Sarkozy.

This device “will be available only to credit institutions that have sufficient equity,” said the head of state. The figure of 320 billion is a “maximum”. “No doubt he will ever be reached,” said the President. And to clarify the gentleman address everyone: it “will not be a cost to the taxpayer.” In the absence of “failure” of an institution, “the taxpayer will win the number of commissions earned on risk coverage.”