2010-03-18

German gov't wants the power to break up the banks

Schwarz-Gelb will Großbanken notfalls zerschlagen
Black-yellow want to destroy the big banks, if necessary
Black-yellow is the current ruling coalition government. The second link goes to a Google translation of the German article.

Long story short, the German government wants the ability to break up banks even against the will of shareholders. This would allow the government to break off the insolvent pieces of a bank. The more free-market oriented FDP want more of the cost of cost of failed banks to fall on the shareholders and creditors, rather than taxpayers.

Given that the Germans have basically said they are opposed to a bailout for Greece, it's important to remember this story:
Ackermann warns of a bankrupt state of Greece
Josef Ackermann, if necessary, calls for a rescue Greece. German banks had considerable billion under fire over the heavily indebted country, "said the CEO of Deutsche Bank, excluding those of his own institute, however. "If we do not get stabilized Greece, the banks have the next problem," Ackermann warned on Wednesday evening.
On the plus side, he does say that CDS are not the problem. As Liu Junluo points out, banning CDS would not be good for the markets.

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