The German Finance Minister, Peer Steinbrück, announced yesterday in a press conference that the German cabinet has approved draft legislation that would permit the nationalization of failing banks as a means of last resort. In his announcement, Steinbrück specified that the legislation will permit involuntary nationalization only if all other measures to stabilize any such bank have proven ineffective. The legislation is expected to be presented to the German Bundestag on April 3, and comes amidst increasing discussion of the proposed nationalization of Hypo Real Estate Holding AG, one of the world’s largest real estate finance companies, which has suffered significantly in the wake of Lehman Brothers’ bankruptcy.
Meanwhile, the German Bundestag announced Friday that it had passed a second economic stimulus bill totaling approximately €50 billion. Among other measures, the new stimulus bill focuses on promoting investments to modernize the economy (such as working training and infrastructure upgrades), providing tax cuts, promoting the automobile industry (particularly promoting development of environmentally friendly automobiles), establishing a labor market policy to prevent job losses and creating constitutional barriers to new government borrowing. In addition, the bill will promote investment in infrastructure, such as schools, roads and hospitals, climate protection and energy efficiency and broad band technology.