Word: german
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Dates: during 2000-2009
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...banks. The move has won plaudits on Wall Street and even a knowing nod from Main Street U.S.A., which understands that the plan is a necessary evil. In Germany, it has also fueled a fierce debate about whether Merkel is wrong and how Berlin might get toxic assets off German banks' books without making taxpayers foot the bill. (See 25 people to blame for the financial crisis...
...speech to German bankers last week Merkel said her opposition to a bad bank was based on a need for fairness in resolving the crisis...
...German banks have an estimated $265 billion to $400 billion in bad debt on their books. Put another way: that's as much as 12% of German GDP. The U.S. bad-bank plans calls for purchasing up to $1 trillion in toxic debt, equivalent to 6.8% of U.S. GDP. German banks have about $550 billion in cash reserves. So, it's not hard to figure out what would happen to the real economy if the banks are left on their own to work through loan failure of this magnitude. "Germany has not succeeded yet in getting control of the financial...
...banks, the finance ministry and SoFFin, the federal bank-stabilization fund, could produce a viable concept for a bad bank before the G-20 meeting. According to Weber, Germany would not create a central bad bank and it would not buy the toxic assets from the banks. Instead, German banks could split each bank into a good bank and a bad bank, allowing the banks to move the bad debt into their bad bank and in return receive fresh capital from the government for their good bank. The government remains skeptical of the plan but still has put no alternative...
...Federation of German Banks, which represents the main private-sector banks, has proposed something along these lines already. Rather than calling it a bad bank the banks call it a "mobilization fund." Each bank would park its toxic assets in an account with the government. This way the assets would be off the banks' books but each security would still be associated with its original owner rather than pooled together. "The mobilization fund is not about burdening the taxpayer with all the risks," Klaus-Peter Müller, head of the banking federation, told reporters...