Montag, 20. Juli 2009

Bank Recapitalisation

According to this Spiegel article, various high-profile German economists are asking the government to force banks to accept government equity participations.

The strange bit: They don't say which banks. Right now, the only major banks without government involvement are Deutsche Bank and HypoVereinsbank. And currently, those two banks appear to fulfill the solvency requirements. So on what grounds would Berlin be allowed to force a partial nationalization on them?

But it gets even better:

The reaons for the partial nationalisation are stated as follows:

Der Bund hätte zudem Einfluss auf die Geschäftspolitik und könne die Institute zur Kreditvergabe zwingen. Außerdem könne die Regierung die Banken von einer Rückkehr zu ihren früheren gefährlichen Geschäftspraktiken abhalten.

On one hand, the banks should be forced to lend more. On the other hand, the government can make sure that the banks will not return to "dangerous practices of earlier times". Right. State-owned banks do a much better job of avoiding "dangerous practices", as evidenced by the great shape of the Landesbanken. And of course being forced to lower lending standards in recessionary times does not constitute "dangerous practices".

(As posted many times already, I am not against nationalising banks that do not have an appropriate level of capital. But only to avoid setting the wrong incentives. Certainly not to force them to lend more or to institute superior risk management practices.)

Keine Kommentare:

Kommentar veröffentlichen