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: JURIST - The Paper Chase

Germany cabinet approves bill that could nationalize ailing banks

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

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[JURIST] German Chancellor Angela Merkel announced Wednesday that her cabinet had agreed on a draft bill that would allow the government to forcibly nationalize some ailing financial institutions. The bill apparently targets Hypo Real Estate (HRE), a holding company that, despite receiving over 87 billion euros in bailout money, has not recovered. Merkel said Monday that the country faces a "crisis that is extraordinary" and that implementing the nationalization measure would be a "last resort." It is likely that a decision to enforce the bill, which would expropriate obstructionist shareholders, would be challenged in Germany's Constitutional Court. The bill is especially controversial because of Germany's Nazi and Communist heritage. The British government moved in the direction of nationalizing several UK banks last October. The continuing financial crisis has shifted global focus to new overall regulatory schemes beyond combating mortgage and investment fraud in the US.

Full post as published by JURIST - The Paper Chase on February 18, 2009 (boomark / email).