[OPE] The Rhineland Model: German government considers banking takeover

Der Spiegel 02/02/2009
THE STATE'S SILENT TAKEOVER
Germany's Big Banking Bailout
By Christian Reiermann and Wolfgang Reuter

The German government wants to buy up large segments of the domestic banking
sector. In addition to the partial nationalization of many ailing financial
institutions, Berlin's plans include a complete takeover - by expropriation,
if necessary. Josef Ackermann, the CEO of Deutsche Bank, likes to come
across as generous. A few days ago in Berlin, he said that he is by no means
too proud to take advantage of the government bailout program for banks, and
that all he wants is to see it benefit those banks that truly need it. "We
are a long way from that," he said. But the competition is skeptical,
especially when the industry leader is having trouble hiding the fact that
it lost about ?4 billion ($5.2 billion) in 2008. In addition, both
competitors and politicians have noted with interest Ackermann's
behind-the-scenes involvement in the development of a "bad bank," that is, a
sort of government dumping ground for unmarketable, high-risk securities.
Industry insiders suspect that Deutsche Bank hopes to shift its own toxic
waste into this new entity - saving face in the process because, after all,
everyone else will be doing the same thing.
http://www.spiegel.de/international/business/0,1518,605044,00.html

"Indeed, the incentive system put in place by financial companies has
produced the worst possible economic system mankind can imagine: capitalism
for the profits and socialism for the losses."
- Nassim Nicholas Taleb, Professor of risk engineering at New York
University, in "How bank bonuses let us all down", FT February 24 2009.
http://www.ft.com/cms/s/0/fa89be08-02aa-11de-b58b-000077b07658.html

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Received on Wed Feb 25 14:43:27 2009