German Parliament Backs Spanish Bank Plan
Source: NYT
Amid much griping, the German Parliament voted Thursday in favor of a plan to rescue Spanish banks, but only after the government of Chancellor Angela Merkel assured skeptical lawmakers that it was essential to survival of the euro and that the Spanish government would remain responsible for repaying the money.
“Problems in the Spanish banking sector have become a danger for the European economy,” Wolfgang Schäuble, the German finance minister, said during a debate on whether to approve Germany’s 29 billion euro ($35.5 billion) share of the 100 billion euro fund. Without Germany’s approval, the money could not be disbursed and Spain would risk a series of big bank failures.
The decision by the Bundestag, the lower house, addresses political sentiment in Germany, but leaves Spain bearing the ultimate financial responsibility for financing the rescue of banks burdened by bad real estate loans. Partly as a result, Spain’s borrowing costs rose to levels considered unsustainable Thursday because investors doubted the country could bear the burden.
“The interdependency of banks and governments will not be cleared up today,” Priska Hinz, a member of Parliament from the Green Party, said in a floor debate.
Read more: http://www.nytimes.com/2012/07/20/business/global/german-parliament-backs-spanish-bank-plan.html?pagewanted=all
