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Germany’s HRE says rescue collapsed(German mortgage giant could go down)
FT ^ | 10/05/08 | James Wilson

Posted on 10/05/2008 5:39:56 AM PDT by TigerLikesRooster

Germany’s HRE says rescue collapsed

By James Wilson in Berlin

Published: October 5 2008 10:07 | Last updated: October 5 2008 10:07

Hypo Real Estate was racing to find a way to save itself on Sunday after the German property lender revealed the collapse of a previous rescue plan.

A consortium of banks that was to provide HRE with an emergency liquidity line had now declined to do so, HRE said at the weekend.

The reversal threatens a dramatic escalation of the financial crisis in Germany and leaves HRE and the Berlin government scrambling to come up with an alternative plan before markets open on Monday.

The government had been an integral part of a €35bn package agreed last week to support the group, which was unable to find enough short-term unsecured finance to support borrowing needs at Depfa, its Irish public sector lending arm.

A failure of HRE, with its €400bn balance sheet, would be the biggest threat to the German financial system of the current crisis. Peer Steinbruck, finance minister, justified the government’s intervention to support HRE by warning that its collapse could badly affect the real economy.

Since HRE’s original rescue plan was agreed a week ago some European governments have become increasingly interventionist in trying to overcome the financial crisis, nationalising a string of banks. But Berlin has appeared less keen on wholesale government intervention and made sure other German banks supported the HRE rescue attempt.

Under the original plan to save HRE, brokered by Berlin, a consortium of banks and the Bundesbank were to provide €35bn of liquidity while the banks and the government provided €35bn of credit guarantees, also backed by HRE collateral.

(Excerpt) Read more at ft.com ...


TOPICS: Business/Economy; Extended News; Foreign Affairs; News/Current Events
KEYWORDS: bailout; demron; financialcrisis; germany; hre
Everywhere dominoes are falling or about to fall.
1 posted on 10/05/2008 5:39:57 AM PDT by TigerLikesRooster
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To: TigerLikesRooster; Uncle Ike; RSmithOpt; jiggyboy; 2banana; Travis McGee; OwenKellogg; 31R1O; ...

Ping!


2 posted on 10/05/2008 5:40:25 AM PDT by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: TigerLikesRooster

What a misnomer! The HRE was neither holy, Roman nor an Empire.


3 posted on 10/05/2008 5:44:29 AM PDT by Lonesome in Massachussets (The Democratic Party strongly supports full civil rights for necro-Americans.)
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To: TigerLikesRooster

I loved how Germany and the euroweenies were screaming about how the US SHOULD fix the economy cause it affects the whole world!

But I thought we should be taking Europe as our model for social and economic role models. ha.


4 posted on 10/05/2008 5:48:35 AM PDT by Recovering Ex-hippie (GOD BLESS GEORGIA! SAVE GEORGIA, OUR ALLY, NOW!)
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To: TigerLikesRooster

Soon to be American taxpayer dollars at work.


5 posted on 10/05/2008 5:49:33 AM PDT by Roccus (POLITICIAN.....................A four letter word spelled with ten letters.)
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To: Roccus
Soon to be American taxpayer dollars at work.

Part of our bail out is being giving to foreign investors/countries already.

6 posted on 10/05/2008 5:55:11 AM PDT by itsthejourney (Sarah-cuda IS the right reason)
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To: TigerLikesRooster

Thank God Congress got involved!

Why should any other entity risk money bailing out BAD BUSINESSES when Congress has just given the Treasury Secretary the authority to do so!

We should all get in line, and “they” should give us whatever we ask for!


7 posted on 10/05/2008 6:01:47 AM PDT by Boiling Pots (Hey B. Hussein, are you going to prosecute me now?)
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To: Recovering Ex-hippie
I loved how Germany and the euroweenies were screaming about how the US SHOULD fix the economy cause it affects the whole world!

The euroweenies conveniently forget that when Chris Cox and the SEC halved the margin requirements for US investment banks, they were following the lead of EU regulators.

8 posted on 10/05/2008 6:02:36 AM PDT by dirtboy
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To: TigerLikesRooster

So, to whom are the euroweenies giving subprime loans? Muzzies?


9 posted on 10/05/2008 6:12:50 AM PDT by CPOSharky (Blaming CO2 for global warming is like blaming your thermometer for your kid's fever.)
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To: CPOSharky
Muzzies and other political constituents. Euro biggies have to play Santa Clause. Besides, some of them go into their hefty salary/bonus package. I heard that officials at Brussels are paid really well.
10 posted on 10/05/2008 6:22:10 AM PDT by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: CPOSharky
"So, to whom are the euroweenies giving subprime loans? Muzzies?"

One of the heavily cited reasons around here is the Community Reinvestment Act. I don't doubt that as a cause, government meddling will usually come to no good. But did Germany have it's own version? Did they have a housing bubble? Banks are failing in Britain, as well, that must be related.

It seems likely to me that the same forces causing our problems could be found to be at work in Germany & Britain, as well. What are they? Anyone?

11 posted on 10/05/2008 7:00:03 AM PDT by HangThemHigh (Entropy's not what it used to be.)
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To: TigerLikesRooster
Most of the bad loans HRE owns are from the US of course. However, I don't see why they should be saved. And I have no idea why people here think they'll be saved with US money. That would be nice, but won't happen. The German government brokered a deal before, which did certainly not involve US money, and that deal seems to have failed, because HRE was unable to calculate their risk correctly even when facing bancrupcy. Begs the question why the hell such a cesspool of incompetence should ever get another chance to work on the German market, paid for by taxpayer money.

And finally, the subsidary which drew HRE into the crisis was an Irish one, working with the US loans from there to dodge taxes in Germany. Good riddance, I say. I hope they either get saved by the Deutschland AG or rather not at all, and no one wastes tax money on this.

12 posted on 10/05/2008 7:02:37 AM PDT by PoliticsAndSausages
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To: HangThemHigh

AFAIK they have been trading the same subprime US packages as everyone else. A bad loan goes around the world.


13 posted on 10/05/2008 7:14:03 AM PDT by PoliticsAndSausages
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To: PoliticsAndSausages
Thanks for your comments. I think I was off track on this issue.
14 posted on 10/05/2008 7:28:35 AM PDT by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: dirtboy
Especially Germany is basing their screaming on the Basel II accord which they implemented and the US did not, although they had announced they would.
15 posted on 10/05/2008 7:29:56 AM PDT by PoliticsAndSausages
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To: PoliticsAndSausages
"AFAIK they have been trading the same subprime US packages as everyone else. A bad loan goes around the world."

Global economy? What a great idea.

16 posted on 10/05/2008 7:34:00 AM PDT by HangThemHigh (Entropy's not what it used to be.)
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To: TigerLikesRooster

Adding this to the Timeline Project / Link List of Bailout History:

http://www.freerepublic.com/focus/f-bloggers/2093845/posts


17 posted on 10/05/2008 7:36:00 AM PDT by Arthur Wildfire! March (BO Change is BS Change. A big Zero Change to help Ayers and Raines.)
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To: HangThemHigh
Global economy? What a great idea.

Ha! We sure screwed them, didn't we? Here Germany, wouldn't you like to buy some mortgages? Ha Ha!

I don't understand why people don't look favorably on us.

18 posted on 10/05/2008 7:37:13 AM PDT by MichiganConservative (Anyone who voted for the bailout thinks of taxpayers as the slaves they are. Vote them all out.)
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To: MichiganConservative

No really, they were just as greedy and as short sighted as everyone else who does that kind of speculation on grossly overblown bubbles without any second thoughts or appropriate securities. I don’t think anyone is making the USA responsible for the fact that banks are too greedy.


19 posted on 10/05/2008 7:41:27 AM PDT by PoliticsAndSausages
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To: TigerLikesRooster

Here comes the Chinese / Russian backed AMERO to save the day. Old W is going to get his way after all.


20 posted on 10/05/2008 7:42:11 AM PDT by jetson
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To: TigerLikesRooster
Well, this is kind of sucky, because our very small company has a contract for a commerical project that recieves financing from these guys. Currently, it is about half our current and next year's projected AR.

Sigh...

21 posted on 10/05/2008 1:11:33 PM PDT by Red Boots
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