Aerar

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Wash me but don’t make me wet

13 October, 2008 (17:13) | finance | By: Aerar

Today morning  in the “Morgenmagazin” of the ARD I saw an interview with Manfred Weber, chairman of the board of the german association of banks  (“Bundesverband deutscher Banken”). Of course the subject was the financial crisis in general and the 400 billion support package (in meantime seemingly  470 billions – it seems as if the exact amounts were not known at the time the interview was lead (german)) of the Government in special. What I found alarming were the answers of Weber, when he was asked what the banks would give in return for such help.

The interviewer was Werner Sonne and I have tried to translate some parts from spoken german to written English. The interview in whole (german) can be watched at the “ARD Mediathek” (german):

Sonne: Now this is a total which is divided into a debt guarantee of 300 billions, so this is no money paid directly to you and 100 billion financial support. What will the banks give in return for that?

Weber: It is important to get stabilization here. Let us wait for the exact sums. We have the problem, that the money market between the banks is not working any more. Dispite of all the good work of the “Bundesbank” and the European Central Bank. Then such a program will be the best program for business activity. Then we will not get in trouble with unavailable credits, which was feared by some and that is the most important: to avoid grave real economic effects.

Now I am not able to see Mr. Weber did answer the question to a far degree. He rather tries to relativize the amount and states his hopes the money market between banks (which indeed have been blocked by the banks themselves) will get running again soon. In addition I get the imagination that missing credits is a kind of unreal phantasm of Angst only some people had.

Seemingly Mr. Sonne has not been satisfied by this answer as well. At least two minutes later he comes back to it:

Sonne: Again the question: the banks will get a great help from the State. What will the banks be able to give in return for that in future? What will they have tio accept? Will we have representatives of the State within the banks soon?

Weber: We have to see that the amount talked about, where we have to wait for the last decision of Cabinet and Bundestag and Bunderat contains different things. This ranges from liquidity aid and guarantees, which are not necessarily lost money, the calculation will be done not before the end, to financial support. If there will be financial support for one bank or the other, the one giving the support would request to paticipate in future decissions…That is normal

Sonne: (interrupting): The one would be the State

Weber: And that one in this case will be, for a time, the State. That ist normal then.

So for the dumbheads: the money talked about is not yet sure, because it has not been decided officially yet. Futhermore it is not that much money (where it is good to know that the yearly budget of Germany (german) is about 300 billion Euro) as the bigger part of 300 billions is only “[…]guarantees, which are not necessarily lost money,[…]” and moreover seemingly are not qualified to request anything in return (“If there will be financial support for one bank or the other,  […]” – so what is in the guarantee case?). I do not dare assuming what happened if I requested a guarantee of my bank this way. And in the case there is real financial support, the State is told (“[…],for a time,[…]“) to retire from this engagement as early as possible and let the banks to it on their owns again. This is not the way to talk with a customer and especially not the way to talk with helpers, who were requested very ofetn by the banks themselves.

If that is the self-image of the leaders of the banks I hope I am not the only one missing humility.