Macs.
02-17-2009, 05:27 PM
Germany to break postwar taboo with new bank law
By Noah Barkin and John O'Donnell
BERLIN/FRANKFURT (*******) - Chancellor Angela Merkel's government appears ready to end weeks of intense debate and back a new law this week which would give Berlin the right to seize private property for the first time in the postwar era.
The law, an extension of bank rescue legislation agreed last year, is due to go before Merkel's cabinet on Wednesday and would set the stage for a nationalisation of Hypo Real Estate (HRXG.DE (http://uk.*******.com/business/quotes/quote?symbol=HRXG.DE)), a high-profile casualty of the financial crisis.
Her government decided last month it needed to take control of Hypo, a Munich-based lender, after giving the bank 87 billion euros (77 billion pounds) in state guarantees over the past year and seeing no improvement in its financial condition.
But negotiations on the legal details of taking it over have dragged on for weeks amid disagreements over how to handle U.S. private equity firm JC Flowers, whose Hypo stake of about 25 percent must be bought to give Berlin the full control it wants.
The government has so far failed to secure a compromise with Flowers and now looks ready to push through a law allowing it to seize possession of Hypo shares, most likely for a small price tied to the current stock value of just above 1 euro. Flowers bought the stock last June at a price of 22.50 euros per share.
Other countries, including Britain and Ireland, have already taken control of stricken banks, justifying an expropriation of shareholders by pointing to the extraordinary nature of the crisis and the need to protect taxpayers.
But the German government has agonised over an "Enteignung" of Hypo shareholders, a loaded term linked in the minds of many Germans to Nazi seizures of Jewish property in the 1930s and East Germany's assault on private business after World War Two.
"The idea of expropriation runs counter to the entire philosophy of the social market economy that postwar Germany was based on," said Hans-Ulrich Wehler, a leading German historian.More: http://uk.*******.com/article/stocksAndSharesNews/idUKLNE51G03020090217
By Noah Barkin and John O'Donnell
BERLIN/FRANKFURT (*******) - Chancellor Angela Merkel's government appears ready to end weeks of intense debate and back a new law this week which would give Berlin the right to seize private property for the first time in the postwar era.
The law, an extension of bank rescue legislation agreed last year, is due to go before Merkel's cabinet on Wednesday and would set the stage for a nationalisation of Hypo Real Estate (HRXG.DE (http://uk.*******.com/business/quotes/quote?symbol=HRXG.DE)), a high-profile casualty of the financial crisis.
Her government decided last month it needed to take control of Hypo, a Munich-based lender, after giving the bank 87 billion euros (77 billion pounds) in state guarantees over the past year and seeing no improvement in its financial condition.
But negotiations on the legal details of taking it over have dragged on for weeks amid disagreements over how to handle U.S. private equity firm JC Flowers, whose Hypo stake of about 25 percent must be bought to give Berlin the full control it wants.
The government has so far failed to secure a compromise with Flowers and now looks ready to push through a law allowing it to seize possession of Hypo shares, most likely for a small price tied to the current stock value of just above 1 euro. Flowers bought the stock last June at a price of 22.50 euros per share.
Other countries, including Britain and Ireland, have already taken control of stricken banks, justifying an expropriation of shareholders by pointing to the extraordinary nature of the crisis and the need to protect taxpayers.
But the German government has agonised over an "Enteignung" of Hypo shareholders, a loaded term linked in the minds of many Germans to Nazi seizures of Jewish property in the 1930s and East Germany's assault on private business after World War Two.
"The idea of expropriation runs counter to the entire philosophy of the social market economy that postwar Germany was based on," said Hans-Ulrich Wehler, a leading German historian.More: http://uk.*******.com/article/stocksAndSharesNews/idUKLNE51G03020090217