Former finance minister Wouter Bos told a parliamentary commission that the 2008-2009 credit crisis was “completely unexpected.”

Mr Bos told the De Wit Commission, investigating the Dutch government’s response to the 2008 credit crisis, that although there were signs of trouble in 2007, it was confined to US and British banks: “We thought the problems would remain with the US and British banks; there were no indications that it would become a systemic problems and affect the global financial sector.”

Reluctant
The former finance chief also told the commission the Dutch Central Bank (DNB) was not overly enthusiastic about the rescue plan that gave the government a say in the running of the banks that had been bailed out by the public purse. ING Bank, SNS Reaal and Aegon were all forced to borrow from the government to keep afloat.

According to Mr Bos, the DNB thought the agreement giving the government a say in the institutions’ policies was complex but Bos said he wanted the financial support to “come with a real price tag” for the banks borrowing from the taxpayer, “otherwise it would just relieve them of their debts and they’d be able to continue on their merry way as though nothing had happened.” Mr Bos told the commission, “If you play with fire and burn your bum, you have to sit on the blisters.”

The architect of the rescue plan, former senior civil servant Bernard ter Haar had earlier testified that the DNB wasn’t ‘overly enthusiastic’ about the scheme to rescue the ailing Dutch financial institutions. On Friday, former DNB chair Nout Wellink told the enquiry that he would not have attached the same conditions to the bailout funds.

Dutch financial institutions hit by the credit crisis ended up borrowing almost 14 billion euros from the government under the Bos/ter Haar scheme. A significant proportion of the money has since been paid back, with interest.
 

(jric)
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