France's top bankers and insurers on Tuesday soberly welcomed a euro360 billion (US$491 billion) rescue plan to guarantee that the nation's banks don't collapse, and legislators debated the costly measure ahead of a vote.
President Nicolas Sarkozy met with 11 leaders of France's banking and insurance sector to present the plan. It is part of an unprecedented weekend decision by the 15 nations that share the euro currency to unblock frozen credit markets, after a tailspin on stock exchanges worldwide last week.
After European governments held a financial summit Sunday in Paris, Sarkozy on Monday announced the details _ and the huge potential cost _ of France's part of the package.
The money includes euro320 billion (US$436 billion) in guarantees for bonds and other loans that banks take out. If the banks make good on that debt, then the French government _ and by extension, taxpayers _ won't have to pay anything, officials have said. The idea is to free up money so that banks can start lending to consumers and businesses again.
The other euro40 billion (US$54 billion) will go to a government-backed agency to provide banks with extra capital. That part of the plan also allows the government to take stakes in troubled banks that get state capital.
The figures are a maximum, which may not be reached if the market starts functioning normally again.
After Tuesday's meeting with Sarkozy, bankers insisted they wouldn't take the rescue gesture lightly.
"We assured the public authorities of our will to fully and responsibly carry out" the plan, the head of the French Banking Federation, Georges Pauget, told reporters. "We will now have the means to do so."
The lower house of parliament was to vote on the plan Tuesday and the Senate scheduled a vote for Wednesday. Both houses are controlled by Sarkozy's conservative UMP party, which has largely supported the president through the financial crisis.
Prime Minister Francois Fillon opened the debate Tuesday by urging lawmakers to back the rescue.
"This unity would be a strong sign of our common desire to get out of the crisis and protect the French people," he told members of the National Assembly.
Fillon's message was lost on the main opposition Socialist Party, which decided earlier in the day to abstain from the voting. The move criticizes Sarkozy's economic policy _ which they blamed, in part, for the crisis _ without torpedoing the plan itself.
Communist lawmakers, however, planned to oppose the measure.
"We don't want this money placed by the state to once again serve speculation," Communist Party leader Marie-George Buffet said Tuesday.
Most of the money in the French plan will be available for government guarantees for banks and insurers, allowing them to raise money through bond sales and other loans with maturities of up to five years. The hope is that this will give banks confidence to start lending again.
___
Associated Press writer Laurent Pirot contributed to this report.
No comments:
Post a Comment