Leading Bundestag Member Calls for Banking Separation, German Veto at EFSF
August 14, 2012 • 12:13AM

Michael Fuchs, economic policy spokesman of the Christian Democrats and a vice chairman of the CDU parliamentary group in the Bundestag, said Monday morning in an interview with the Handelsblatt business daily, that the LIBOR and Euribor scandals plus other incidents on the financial markets not only call for harsh juridical and other consequences, including at the top of Deutsche Bank; Fuchs also called for banking separation to make sure that "taypayers don't foot the bill for the risky deals of the investment bankers." The market rallies that have continued at full pace, at the expense of taxpayers, must be stopped, he added. LIBOR manipulators must be held accountable.

Fuchs's endorsement of bank separation is important, since he has been among those that have been most skeptical of it, in the past — —apparently, as also indicated by the prmninent report on Deutsche Welle, Germany's English-language state radio program last week, some people are changing their views on the issue.

Fuchs also said that Germany should veto future bailouts of Greek and other banks by the ECB and by the EFSF, if the conditions are not acceptable. In the case of Greece, he is not optimistic that the country can stay in the euro, anyway, and although he said the Greeks should not be driven out of the euro, he asserted his confidence that the Greek politicians know what to do.

Another round of ECB purchasing programs for Greek and other sovereign bonds is not acceptable, Fuch says, because that would be a "covert use of the money-printing press, and the ECB should not be permitted to step in when even the EFSF and ESM could not act in the case of Greece. This tightrope-walking strategy of the ECB is not solving problems, but only creating new ones, Fuchs said. As for the ESM, he categorically rejected any kind of banking license, while at the EFSF, if other governments voted in favor of new bailouts for example for Greece, Germany should make use of its veto rights, he insisted.