Tags: EU | Germany | Bank | Fund

Germany Approves Big Bank Tax to Fund Bailouts

Wednesday, 31 Mar 2010 10:04 AM

The German government on Wednesday approved a plan to have banks pay into a fund to cover the costs of future financial crises — a proposal greeted with interest by France's visiting finance minister.

The government expects that the levy would raise between 1 billion euros and 1.2 billion euros ($1.35 billion and $1.6 billion) per year for the so-called "stability fund," German Finance Minister Wolfgang Schaeuble said.

Schaeuble said the government expects to draw up detailed legislation by this summer. He said Germany would aim for rules at the European level, but would push ahead with its national bill.

The government tried to produce plans that "give sufficient incentives to really reduce systemic risks, but don't damage banks' ability to encourage the process of economic recovery or restructuring," Schaeuble told reporters.

The German opposition contended that the fund would bring in too little money and dismissed the plan as a blatant political gambit ahead of an important regional election in May.

The Cabinet meeting that decided in principle on the bank levy was attended by French Finance Minister Christine Lagarde — who also is considering what measures to take to help avert future crises.

The German proposals "will be very useful to us" in considering French responses to the financial crisis — for instance, whether bankruptcy laws need to be adjusted, what financial market players should be taxed and where the proceeds should go, Lagarde said.

"We are fundamentally in agreement on the objective — making (banks) responsible, taxation to prevent systemic risks," she said.

"We also are fundamentally in agreement on the international nature this mechanism should have, and on the fact that we have to preserve a level playing field between banks that are active on international financial markets," Lagarde added.

Germany's banking industry has given the fund proposal a cautious welcome. However, a senior lawmaker with the main opposition party was critical.

"The volume is absolutely insufficient" given that banks have resumed paying bonuses, Joachim Poss of the center-left Social Democrats told ARD television. "If there is money for bonuses, then they also can pony up more money to help finance the costs of the crisis than is foreseen now."

Poss described the plan as a "campaign maneuver" ahead of a May 9 election in Germany's most populous state, North Rhine-Westphalia, which could cost Chancellor Angela Merkel's center-right government its majority in the upper house of parliament.

The German plan also calls for the government to draw up new procedures for reorganizing struggling banks that would, for example, allow for parts of them to be transferred to a state-owned "bridge bank."

© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 
1Like our page
2Share
FinanceNews
The German government on Wednesday approved a plan to have banks pay into a fund to cover the costs of future financial crises a proposal greeted with interest by France's visiting finance minister.The government expects that the levy would raise between 1 billion euros...
EU,Germany,Bank,Fund
431
2010-04-31
Wednesday, 31 Mar 2010 10:04 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved