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The following are comments by Thirachai Phuvanatnaranubala, secretarygeneral of the Office of the Securities and Exchange Commission, on the US banking bailout package.

To be or not to be (nationalised), that is the question.

The US Treasury announced a "public/private investment programme" to buy toxic assets from the banks. But will it really work?

I personally agree totally with Prime Minister Abhisit Vejjajiva's proposal to do away with IMF loan conditions. During the 1997 Asian crisis, the conditions imposed on Thailand included keeping the interest rate high, closing down financial institutions and tightening government spending to produce a surplus of 1 per cent of GDP. I am glad no country is copying that idea in the present crisis.

I remember also that after the crisis erupted, there were active calls for a new financial architecture, as is happening now. But the calls in those days went unanswered.

The emerging markets demanded more control and disclosure of hedged funds' activity. This was ignored. Suggestions were made to impose higher risk weights in the calculation of capital ratio for banks lending and their trading book exposures to all highly leveraged hedge funds in order to reflect their higher risks. This was also ignored. Requests were put forward for a scheme to allow sovereign debt to be restructured with appropriate hair cuts similar to private debt, to force privatesector participation. This again never made much progress.

This time the call for a new financial architecture might stand a better chance because the requests come from bigger countries.

But to be fair to the IMF, they made one good suggestion that helped restore confidence in the Thai banking system. It was to mark down bank assets to real value. The losses wiped out bank capital. Banks were ordered to reduce their registered capital to almost zero. Then the authority recapitalised the banks and owned them for a period before selling them off, partly to foreign partners and partly on the Thai stock exchange.

This action saved the banks, but not the bank shareholders. The bank management was also replaced.

Of course, it is entirely for the US administration to decide whether to save only the banks (by nationalising) or to also save the bank shareholders (by buying bank assets at inflated value to avoid nationalisation). But I am a stakeholder in their schemes. All people are. If their schemes solve the crisis quickly, we all win. If not, we all lose.

But I suspect that any scheme that aims to save the bank shareholders and their incumbent executives risks getting stuck in a political quagmire. Parliament in Thailand will never allow such a thing. I suspect the same could happen in the US. And this is important. Earlier this week, in a breakfast meeting with highranking officials in Jakarta, there was a discussion about how nobody seems to be able to sway the US. Not the G3. Not the G20. Not the IMF. No one, except the US Congress!

In Thailand, while the banks were owned by the authorities, they were run by experienced executives recruited from the private sector. It did not seem to hurt. And if the executives want complete freedom of action, they can put together a buyout proposal right after the economy starts to recover. In fact, bank recapitalisation by the government can even be done in the form of convertible debt. It may not save the stock exchange, but it could save the banking system.

Coming back to the question, will the "programme" work? My answer is, it will:

- if there is no buying of nothing for something, and 

- if there is adequate bank recapitalisation afterwards.

It should sail through the political process and put the world on its feet again.