Some banks go to the international markets when they need money for a big deal. Monte dei Paschi di Siena, one of Italy’s biggest lenders, tapped its own loyal customers, the New York Times reported today. “The bank has always been a gold mine and the pride of the city,” said Paolo Emilio Falaschi, a lawyer in Siena who represents several aggrieved clients. The aftershocks of that strategy have presented European leaders with their first major too-big-to-fail moment, as authorities on Thursday gave the initial greenlight for a bailout of Monte dei Paschi. Monte dei Paschi never recovered from its ill-fated and costly deal; the firm has been marred for years by scandal, management upheaval and hefty losses. As the bank runs low on cash, the Italian government is stepping in to help, with plans to inject as much as 20 billion euros into Monte dei Paschi and other troubled lenders. European regulators gave their preliminary approval to the Monte dei Paschi deal on the condition that the bank go through an in-depth restructuring and its finances pass muster.
