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SPD calls for bank split

The Local · 17 Oct 2011, 08:02

Published: 17 Oct 2011 08:02 GMT+02:00

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“We don’t need any sledgehammer suggestions, we need better regulation,” Klaus-Peter Flosbach, finance spokesman for the governing Christian Democratic Union (CDU) Monday’s edition of the Frankfurter Rundschau newspaper. He added that it was important to shore up the existing banking sector against future crises.

Florian Toncar, deputy parliamentary leader for the Free Democratic Party (FDP), junior partner in the centre-right coalition, accused Gabriel of “chasing after the demonstrators in the streets.”

He said dividing commercial and investment banking would offer no protection from a financial crisis. Toncar pointed out that the 2008 financial crisis was caused by the downfall of Lehman Brothers, a pure investment bank.

Gabriel told Der Spiegel over the weekend, “I want there to be a big sign on the door to the investment banking sector that reads, ‘State guarantees end here.’”

He also said that capitalism needed to be “fettered,” and encouraged people to take to the streets in protest against the banks and financial traders. “The worship of the unconditional freedom of markets has brought the world to the edge of ruin,” he said.

Gabriel admitted that the SPD had contributed to liberalizing financial markets in the past. “Of course we’ve made mistakes too,” he said. “We let ourselves be cowed by the idea that Germany would fall behind if we didn’t deregulate the financial markets too.”

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DAPD/The Local/bk

The Local (news@thelocal.de)

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Your comments about this article

10:00 October 17, 2011 by twisted
I agree with Gabriel. Split the banks so that not one Euro flows between them. Only they will private savings be really safe from the wild rides of personal profit driven bankers.
13:47 October 17, 2011 by LecteurX
Who's that Florian Toncar guy? By the sound of what he says, the FDP looks like it deserved the severe beatings it repeatedly took in elections all over the country this year.

"Toncar pointed out that the 2008 financial crisis was caused by the downfall of Lehman Brothers". What a disgusting lie. The financial crisis was very much there already, when Lehman Brothers collapsed, being so choked with worthless debts and illiquid assets mainly made up from those CDOs and CDSs backed by subprime mortgages. Lehman just dug it grave till the very end, believing it was "too big to fail" and that the Govts would agree to save it with taxpayer's money, just as they had done with Bear Stearns, AIG and Merrill Lynch. These FACTS happened only 3 years ago and you already find politicians telling lies about them? These FDP guys are clowns and should be laughed out of power.

The SPD idea is nothing new at all, indeed, it is largely inspired by the Glass-Steagall act of 1933, which protected the world from the excesses of investment banking for almost 50 years before its gradual repeal over the 1980s and '90s. Was this Act such a bad thing? It's a debatable case, but evidence from the last decade suggests that all the wonderful benefits of "financial deregulation" are not at all what they were cracked up to be, at least for the bottom 99% of the world's population.
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