In
Italy, banks are relaxed,
having long faced more stringent government oversight than their U.S.
counterparts. Italian banks stayed away from complicated derivatives and
maintained higher standards on who they chose to lend
money to, demanding more collateral on home loans, for example.
That
approach was widely derided as outmoded socialism during Wall Street's boom
years. Now it looks as if the U.S.
financial system might become more like Europe's.
Economic Anxiety Circles Globe with U.S. Recovery
Plan in Limbo
The
financial earthquake that started in the USA
reverberated throughout the world Tuesday, from shoe factories in China to day traders in Hong Kong to the
banks of Italy.
USA
TODAY
By
Jeffrey Stinson
October
1, 2008
....MILAN, Italy
On Tuesday
morning, less than 24 hours after the biggest one-day point drop in Wall Street
history, Italian banker Oscar Castoldi calmly sipped
an espresso in a cafi in the heart of Milan's financial
district.
"America
and the U.K. used to say the Italian banks were backwards, but it turns out we
were the smart ones," Castoldi said.
Not
everyone in Europe was so calm Tuesday.
Governments in Britain, France, Denmark,
Germany and elsewhere are
spending billions of dollars to counteract the liquidity crisis spreading from
across the Atlantic. However, concern here has
mixed with a sense of vindication.
In
Italy, banks have long faced
more stringent government oversight than their U.S. counterparts. Italian banks
stayed away from complicated derivatives and maintained higher standards on who they chose to lend money to, demanding more collateral
on home loans, for example.
That
approach was widely derided as outmoded socialism during Wall Street's boom
years. Now it looks as if the U.S.
financial system might become more like Europe's.
"Perhaps
we don't have the light touch in regulating our financial sector, but
apparently that light touch or no-touch didn't work very well for America,"
said Luigi Spaventa, the former chairman of the
Italian Securities and Exchange Commission.
The
tone is less celebratory for Europe's housing
market. Dominic Agace, managing director of Winkworth, one of Britain's biggest real-estate firms, had
expected renewed buyer interest after British housing prices fell 6.2% during
the past 12 months.
Now,
Agace says, "many people cannot get the money to
(buy)."
Back
in Italy,
unemployment and inflation are rising and the central bank predicts just 0.4%
growth in gross domestic product this year. Regardless, Castoldi
is confident that when he finishes his espresso, he'll be heading back to a
secure job.
"That's
more than many employees at American banks can say," he says.