OBAMA IDEA OF NATIONAL BANK FOR BAD LOANS IS REJECTED IN GERMANY

Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” —Ronald Reagan

Trying TO FIND A QUICK SOLUTION FOR THE GROWING "BAD PAPER" THAT U.S. BANKS HOLD.
The Obama transition team is floating the idea that the government establish a Federal Bank to absorb the bad paper held by banks in the USA.
This concept is not a new idea. It has been mentioned in political circles among Germany's political parties, and as expected the opposition has been immediate and critical.

In Great Briain the news is eqally bad. Britain launched a second bank rescue plan on Monday and Royal Bank of Scotland recorded the biggest loss in UK corporate history, while a cut in Spain's credit rating caused fresh market wobbles.

Announcing Britain's bank bailout, finance minister Alistair Darling said fourth-quarter GDP figures on Friday would confirm the UK was in recession for the first time since 1992.

RBS shares closed down 67 percent, denting British share indices, while concern about the rescue plan's multibillion price tag drove UK gilt futures to five-week lows and helped push sterling down nearly 1.6 percent against the dollar. Source: Reuters,UK

Britain has pumped 37 billion pounds($55billion) into it's banks, but credit loans are still scarce, UK will not allow it's banks to insure itself against loses on its riskiest investments assets (aka: bad loans).
The statement that follows sums up this blogger feelings toward the bail outs."If recent history is a guide, any market euphoria related to such a bailout package generally evaporates on the realization that such mammoth support was required in the first instance," said Daragh Maher, Deputy Head of Global FX Strategy at Calyon.
Sooner or later we will have to pay the piper!

Perhaps the Obama team should look at what has happened to Germany's adventure ino socializing some of it's banks.
The partial nationalization isn't just aimed at helping Commerzbank, the largest Bank in Germany. The government above all wanted to revive its financial sector rescue plan in the face of growing criticism. The problem is that the package with its €400 billion in state guarantees and additional €80 billion in equity assistance has so far failed to restore the banks' trust in each other -- the banks are still refusing to lend each other meaningful sums of money.
This sounds strangely similar to what resulted from the first part of TARP in the USA.

Der Spiegel report this: "The Finance Ministry in Berlin estimates that the entire German banking sector is still holding risky securities totalling up to €1 trillion(398 billion US$). Given that volume, Finance Minister Peer Steinbrück of the center-left Social Democrats, believes it would be irresponsible for the government to set up a so-called "Bad Bank" as a repository for toxic assets stemming largely from the devastated sub prime mortgage market, as banks have suggested.

"In the worst case that would cause the federal government debt to more than double," said one member of Steinbrück's staff. At present the federal government debt amounts to almost €1 trillion.

Several banks have said that stalled bank lending won't resume unless banks can offload their toxic securities in a Bad Bank."

Unlike the USA, in Germany many of the Banks are Federally owned to begin with. The private banks are called "Landesbanken". The German banks have only written off as worthless one quarter of the bad loans held.

The majority of the bad loans are American. Reports show their non-performing securities are linked to American mortgages and student loans, according to a survey of 20 major German banks conducted by the German central bank and banking watchdog BaFin.Source: BaFin

It would appear that the Obama teams Bank idea would be a bigger help to the Germans than to the American taxpayers who would eventually have to pay for the lost money. This would be in the form of another hidden tax as the dollar is certainly going to be devalued due to all these bail outs!