Scott, David2012-08-132012-08-132009-10https://hdl.handle.net/10986/10228The current financial crisis evolved quickly. In most of the developed countries affected, governments initially improvised solutions that eventually led to substantial investments in systemically important banks. Not all their actions are worth emulating, especially those that undermine normal governance arrangements and the ability of all shareholders to hold the banks' board and management accountable. Lessons from earlier crises show that governments acting as temporary owners can minimize costs to taxpayers by following sound commercial practices and good corporate governance principles. Quickly developing and making public the exit strategy is also important.CC BY 3.0 IGOACCOUNTABILITYACCOUNTINGAUDITINGBALANCE SHEETBANK EQUITYBANK LENDINGBANK RECAPITALIZATIONBANKING CRISISBANKING SYSTEMBANKRUPTCYBANKRUPTCY LAWBANKSBENEFICIARIESBOOK VALUEBOOK VALUE OF ASSETSCAPITAL ACCORDCAPITAL ADEQUACYCAPITAL RATIOSCAPITAL REQUIREMENTSCOMMON EQUITYCOMMON SHARESCOMMON STOCKCONVERSIONSCORPORATE GOVERNANCECORPORATE LAWCREDIT DECISIONSCREDIT EXPANSIONDEBTDEBT RESTRUCTURINGDEPOSITDISTRESSED BANKDISTRESSED BANKSDIVESTMENTDIVIDENDDIVIDEND PAYMENTSDIVIDEND YIELDEARLY REPAYMENTEMERGING-MARKETEQUITY CONVERSIONSEQUITY MARKETFAILED BANKSFEDERAL DEPOSIT INSURANCEFEDERAL DEPOSIT INSURANCE CORPORATIONFINANCIAL CRISISFINANCIAL HEALTHFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL REFORMSFINANCIAL STRENGTHFINANCIAL SYSTEMFORBEARANCEFUTURE EARNINGSGOVERNANCE ISSUESGOVERNANCE PRACTICESGOVERNMENT INVESTMENTGOVERNMENT INVESTMENTSGOVERNMENT OWNERSHIPGOVERNMENT PAPERINDEBTEDNESSINFORMATION TECHNOLOGYINSOLVENTINTEREST RATESINVESTINGINVESTMENT BANKINVESTMENT BANKINGINVESTMENT DECISIONINVESTMENT NEEDSLAST RESORTLEGAL REQUIREMENTSLEVERAGELIQUIDATIONLIQUIDITYMARKET ANALYSTSMARKET DEVELOPMENTSMARKET DISTORTIONSMARKET INTERESTMARKET INTEREST RATESMARKET VALUATIONSMINIMUM CAPITAL REQUIREMENTSNEGOTIATIONSNEW CREDITOWNERSHIP INTERESTOWNERSHIP RIGHTSPASSIVE INVESTORPAYMENTS SYSTEMPOLICY RESPONSESPORTFOLIOPOTENTIAL INVESTORSPREFERRED STOCKPRIVATE SECTOR DEVELOPMENTPROFESSIONAL INVESTORPROFITABILITYPRUDENTIAL RULESPUBLIC ACCOUNTABILITYPUBLIC INVESTMENTSPUBLIC POLICYPUBLIC SALERATE OF RETURNRECAPITALIZATIONRECAPITALIZATIONSREDEMPTIONREGULATORY CAPITALREPAYMENTRETURNRETURN ON INVESTMENTRISK MANAGEMENTRISK PROFILESEIZURESHAREHOLDERSHAREHOLDERSSOLVENTSTATEMENTSUBORDINATED DEBTSUPERVISORY AUTHORITIESTIER 1 CAPITALTRANSPARENCYTREASURYUNSECURED CREDITORSVALUATIONSVALUE OF ASSETSWARRANTSWorld Bank10.1596/10228