{news} Fw: USGP-INT German green party on the right side on this isue

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From: Julia Willebrand 
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Sent: Wednesday, February 04, 2009 2:13 PM
Subject: USGP-INT German green party on the right side on this isue








Merkel Fails to Resolve Rift on Hypo Nationalization (Update2)
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By Rainer Buergin and Tony Czuczka


Feb. 4 (Bloomberg) -- German Chancellor Angela Merkel and Foreign Minister Frank-Walter Steinmeier, her challenger in Sept. 27 elections, failed to resolve a coalition dispute over nationalization of Hypo Real Estate Holding AG.


Talks at the chancellery in Berlin today broke up with Merkel’s Christian Democratic Union and Steinmeier’s Social Democratic Party unable to bridge a divide over how to save Hypo Real, the Munich-based property lender that’s already received 92 billion euros ($120 billion) in public funds.


“There was no agreement over changes to the bank-rescue package or on the state taking a stake in Hypo Real Estate,” Ulrich Wilhelm, the chief government spokesman, said in a statement. “All options were thoroughly discussed but no decisions were taken.” He later told reporters that a draft law will be outlined “in the next few weeks.”


Merkel’s dilemma over nationalization of banks is echoed internationally. U.K. Prime Minister Gordon Brown suffered a setback late yesterday when the House of Lords voted to amend legislation allowing the U.K. government to nationalize banks. President Barack Obama’s administration “appears to be tying itself in knots” to avoid nationalization, Nobel Prize-winning economist Paul Krugman wrote in the New York Times on Feb. 2.


‘Alternative Ways’


“Those who push for nationalizations have to explain why there are no alternatives,” Steffen Kampeter, budget spokesman of Merkel’s Christian Democrats, said yesterday by phone. “I want the government to set agreed goals next week on ways to deal with troubled banks and show parliament alternative ways of reaching these goals.”


Finance Minister Peer Steinbrueck, a Social Democrat, is paving the way for nationalization as the best means to rescue Hypo Real Estate, according to Kampeter. Torsten Albig, Steinbrueck’s spokesman, said Feb. 2 that the minister is exploring taking over lenders as “one possible option” to “bolster an institution so it doesn’t go into insolvency.”


Steinbrueck is flirting with a “very dangerous package” that “isn’t helping to stabilize the financial market,” said Josef Schlarmann, a CDU member who heads a lobby representing 40,000 business owners and managers allied with the party. “I have the impression that objective arguments are being mixed up with election campaign interests,” he said in an interview.


Hypo Real Estate was forced to seek a bailout after Depfa Bank Plc, its Dublin-based unit, failed to get short-term funding in September when credit markets seized up. Hypo Real now requires another 10 billion euros, according to Handelsblatt newspaper.


‘Nationalization Is Coming’


“There’s a significant need for capital, so full nationalization is coming -- this is the only fair solution for taxpayers,” Gerhard Schick, finance spokesman in parliament for the opposition Green Party, Steinmeier’s favored coalition partner, said in an interview.


“The Union,” comprising Merkel’s Christian Democratic Union and their Bavarian sister party, the Christian Social Union, “is holding a very ideological debate about whether the government should own banks,” said Schick. “There’s no time for ideological debates, only pragmatic suggestions that are good for banks and taxpayers.”


The Christian Democrats and Social Democrats are both at historic lows in opinion polls. Merkel’s CDU dropped one percentage point to 34 percent, according to a weekly Forsa poll for Stern magazine released today.


That’s below the 35.2 percent the CDU scored at the last election in 2005. If replicated in September, it would be the CDU’s worst result in a national election since 1949.


Steinmeier’s SPD gained one point to 23 percent compared with 34.2 percent in 2005.


To contact the reporters on this story: Rainer Buergin in Berlin at rbuergin1 at bloomberg.net; Tony Czuczka in Berlin at aczuczka at bloomberg.net
Last Updated: February 4, 2009 09:58 EST


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