SPD calls for bank split

SPD calls for bank split
Photo: DPA
Social Democratic Party (SPD) head Sigmar Gabriel has called for a permanent division of investment and commercial banking to protect consumers from toxic debts run up by banks. The German government quickly rejected the idea.

“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.”

DAPD/The Local/bk

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