Tuesday, October 7, 2008

Is Merkel’s guarantee legal?

On Monday, the German government guaranteed all saving accounts in the German banking system. To be sure, however, Angela Merkel guaranteed the loans without Parliamentary approval. An excerpt from the Deutsche Welle article, Merkel Calls For Protective Steps as Savings Pledge Stirs Debate.
Government split over legality of Merkel's plan

A number of opposition lawmakers clashed members of the ruling coalition Tuesday over claims that German law says the government can only make such guarantees with parliamentary approval.

'If the government is serious then it must also give the so-called guarantee a serious framework,' Otto Fricke -- a member of the Free Democrats (FDP) and chairman of the lower house budget committee -- said, adding that this could include a supplementary budget.

'The Bundestag (lower house) must really give its support,' Christine Scheel, deputy head of the Greens parliamentary group, said of the savings guarantee. If the government ever had to follow through on its pledge, a supplementary budget would be necessary, she said.

The German Finance Ministry initially estimated the guarantee covered around 563 billion euros ($764.8 billion) in private savings accounts, but has since said that additional private money in checking and time deposit accounts would bring the total to over 1 trillion euros. Figures from the German banks association (BDB) suggest it could be even higher, around 1.6 trillion.'
RW: Is this the equivalent of Bush and Paulson moving without Congress’ approval? Sounds fishy. However, if a slew of banks failed and the government was called to pay out on Merkel’s guarantee, do you really think that Parliament would not approve it?

Rebecca Wilder


  1. Big "OOPS". But , isn't that like a politician to guarantee goodies just to make people feel better (not that I have anything against Merkel).

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