Groundhog day: Geithner botches another bailout
Should taxpayers own the good banks?
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| Jan Hommen: positive impact |
When the Dutch bank first secured a €10 billion capital injection from the Dutch government in October 2008, it was already exploring ways to ring-fence its exposure to further potential losses on this portfolio but hadn’t developed the right methodology for this. Then came the awful results of the fourth quarter of 2008, bringing further impairments on a portfolio of illiquid securities held for sale that the bank had to mark to a distressed price in a thin market. ING lost €2 billion on the portfolio in the fourth quarter, pushing the whole group into a loss for the year of approximately €400 million and requiring it to allocate more capital against the portfolio, leaving it with less capacity to make new loans. ING pushed forward plans to do a deal with the Dutch government to protect it against further losses and free up capital. For its part, the Dutch government hired external consultants Dynamic Credit Management, a firm founded in New York by Jim Finkel and Tonko Gast, to undertake due diligence on the alt-A RMBS portfolio.
