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Ireland moved toward greater government control of its financial system Wednesday by bailing out its two largest lenders, while shareholders in Fortis, once the biggest bank in Belgium, derailed state-led plans to sell the nationalized business to BNP Paribas of France.Together, the moves suggested that Europe-like the United States-was still struggling to find the right template for stabilizing its banks, one that could soothe jittery markets and an increasingly incensed public.The Irish government, meeting Wednesday night, approved a capital injection of €3.5 billion, or $4.5 billion, each for Allied Irish Banks and Bank of Ireland, a Finance Ministry official said. Bloomberg News reported later Wednesday night that the ministry confirmed the move in an e-mail message.That made Ireland the first European Union country to take de facto control of all of its most important banks. Last month, the government stepped in to nationalize the teetering Anglo Irish Bank, which was No.3.In Brussels, the vote by Fortis shareholders left the bank's Belgian operations in government hands while BNP Paribas decided whether to go to court or take its money - nearly €7 billion - and walk away.Since the financial crisis deepened in September, policy makers in Europe and in the United States have tried various approaches to stabilize banks, ranging from loan guarantees to capital injections, forced mergers and breakups and most recently commitments to create institutions to acquire tainted assets.The ad hoc approach has not settled investors, who continue to shun bank shares.Markets dived again after the announcement Tuesday of a new plan to bail out U.S. banks.Treasury Secretary Timothy Geithner's plan, which included creating a so-called bad bank, was seen as too vague and ineffective in combating the worsening financial crisis.Major U.S. market indicators were little changed Wednesday afternoon.The fundamental problem is that almost no one knows what is on the balance sheets of most banks, and as the recession deepens, even once solid lenders are being dragged down by uncertainty and investor nerves. Some analysts say it may be time for policy makers to do what they have been studiously trying to avoid: full-scale nationalization, at least in certain countries...By Matthew Saltmarsh and Eamon Quinn
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