3 July 2009 | 21:21 | FOCUS News Agency
Berlin. Germanyâs lower house of parliament, the Bundestag, has passed a bill for the creation of "bad banks" to absorb toxic assets and clean up balance sheets at financial institutions caught up in the financial crisis, Deutsche Welle.
The bill is essentially aimed at unfreezing credit markets and freeing commercial and state-owned banks of their risky and non-core assets.
This will be achieved by shifting as much as 230 billion euros ($322 billion) worth of toxic assets held by banks to the so-called bad banks.
The plan will involve exchanging items such as asset-backed securities and collateralized-debt obligations for state-guaranteed bonds, for which banks will be charged a fee.
It is hoped the bill can help consolidate Germany's many state-owned banks, the Landesbanken, several of which have been hit hard by the effects of the US subprime mortgage crisis.
Finance Minister Peer Steinbrueck denied to legislators that the bill effectively meant the taxpayer was picking up the tab for past bank excesses.
He assailed Germany's savings banks, also known as Sparkassen, which had criticized the bill. He also said the German taxpayer was most at risk from any savings bank losses because those institutions were backed by government guarantees.
http://www.focus-fen.net/index.php?id=n186249
Berlin. Germanyâs lower house of parliament, the Bundestag, has passed a bill for the creation of "bad banks" to absorb toxic assets and clean up balance sheets at financial institutions caught up in the financial crisis, Deutsche Welle.
The bill is essentially aimed at unfreezing credit markets and freeing commercial and state-owned banks of their risky and non-core assets.
This will be achieved by shifting as much as 230 billion euros ($322 billion) worth of toxic assets held by banks to the so-called bad banks.
The plan will involve exchanging items such as asset-backed securities and collateralized-debt obligations for state-guaranteed bonds, for which banks will be charged a fee.
It is hoped the bill can help consolidate Germany's many state-owned banks, the Landesbanken, several of which have been hit hard by the effects of the US subprime mortgage crisis.
Finance Minister Peer Steinbrueck denied to legislators that the bill effectively meant the taxpayer was picking up the tab for past bank excesses.
He assailed Germany's savings banks, also known as Sparkassen, which had criticized the bill. He also said the German taxpayer was most at risk from any savings bank losses because those institutions were backed by government guarantees.
http://www.focus-fen.net/index.php?id=n186249
