European governments decided against a joint bailout of the Continent’s financial system, but that hasn’t stopped individual governments from trying to save failing and financially shaky institutions. The German government, which has been highly critical of U.S. economic mismanagement, just backed a $68-billion deal to save one of its biggest banks.
Berlin’s finance ministry said it had acted to stop Hypo Real Estate’s collapse in order to avoid “incalculably large” damage to Germany and financial services providers in Europe.
German Chancellor Angela Merkel said managers at financial institutions should be held accountable for “irresponsible behaviour”.
Earlier, she moved to reassure German savers all their deposits would be safe.
Similar unilateral guarantees issued by the Irish and Greek governments last week were criticised in Berlin and other European capitals.