Germany blasts EU over bank bailouts

Germany blasts EU over bank bailouts
Photo: DPA
German and Swedish finance ministers blasted the European Commission on Tuesday for being too "bureaucratic" in assessing whether state bailouts of troubled banks are in line with EU rules.

“You shouldn’t react to such a financial crisis in such a bureaucratic manner,” said German Finance Minister Peer Steinbrück as he arrived for talks with his EU counterparts.

“We need to restore the credit channel. The commission has not been constructive,” Swedish Finance Minister Anders Borg said. “I do think that we have to pull off these legions of state aid bureaucrats.”

In the face of the worst crisis in generations, many EU goverments have rushed to prop up banks through measures ranging from nationalisation to recapitalisations and loan guarantees.

The European Commission, the European Union’s state aid watchdog, has vowed to review state support for troubled banks more quickly than normal as well as be more flexible than usual.

However, Brussels has drawn fire for requiring too many guarantees that competition would not be stifled by the bailout plans.

“I do think that we have a risk of a huge policy mistake,” Borg said.

The commission’s misgivings over a massive capital infusion into German bank Commerzbank has grated on nerves in Berlin.

Over the weekend, a cloud of uncertainty hung over French plans to help troubled banks amid reports that Brussels was preparing to reject them, which it later denied.

EU Competition Commissioner Neelie Kroes, who is in chrage of reviewing state aid, was to meet with EU finance ministers during their meeting in Brussels.