by Calculated Risk on 10/13/2008 12:50:00 PM

From Bloomberg: EU Nations Commit 1.3 Trillion Euros to Bank Bailouts

France, Germany, Spain, the Netherlands and Austria committed 1.3 trillion euros ($1.8 trillion) to guarantee bank loans and take stakes in lenders ...

In Germany, Chancellor Angela Merkel pledged to guarantee up to 400 billion euros of lending between banks and set aside 20 billion euros to cover potential losses. It will also provide as much as 80 billion euros to recapitalize banks ...

In France, President Nicolas Sarkozy said the state will guarantee 320 billion euros of bank debt and set up a fund allowed to spend up to 40 billion euros ...

Spain's cabinet today approved measures to guarantee up to 100 billion euros of bank debt this year and authorized the government to buy shares in banks in need of capital.
...
The Austrian government will set up an 85 billion-euro clearinghouse run by the Austrian Kontrollbank to provide cash by holding illiquid bank assets as collateral. Austria also pledged to buy banking shares...

The Dutch government will guarantee up to 200 billion euros of interbank loans ...

Italy will guarantee some bank debt and buy preferred stock in banks if necessary ... without providing any figures.

As Nobel Prize-winning economist Paul Krugman noted this morning:

This sort of temporary part-nationalization ... is the crisis solution advocated by many economists — and sources told The Times that it was also the solution privately favored by Ben Bernanke, the Federal Reserve chairman.
emphasis added

This was generally the approach favored by Roubini (see Roubini's post today), Krugman and many others. When the history of the credit crisis is written, it will be interesting to understand why Paulson proposed his plan - even though Bernanke and others argued for the recapitalization plan.