Advisory Board warns of major risks in the financial system – FAZ – Frankfurter Allgemeine Zeitung

The scientific adviser to the Minister of economic Affairs Sigmar Gabriel (SPD) sounding the Alarm: The rules for banks according to their analysis of important gaps. “It is to be feared that in the foreseeable future substantial new burdens on the financial system or the taxpayer”, they warn. “Due to these gaps, the financial stability is at risk”, according to a brand-letter from the Board of Gabriel. The body of a forty-renowned Economists are in short supply. The letter sent opinion has developed Martin Hellwig from the Max-Planck-Institute in Bonn in the lead, sent you has

author: Manfred Schäfers, Economics correspondent in Berlin. consequences:

In the paper that has been submitted to the F. A. Z., the proposals of the Basel Committee on banking supervision capital regulation. The scientists are outraged by the resistance of Germany and other EU States and the European Commission. The arguments being put forward against the Basel proposals, could not convince. “They are shaped by the interests of the banks and neglect the risks for the taxpayers. They neglect the experience of the past decade," reads an admonition.

real estate loans are a lump sum of safe

The conflict dealt with is whether the banks will continue to, are, to identify with their own models, the risk of their transactions and, consequently, to determine the necessary equity. The Advisory Board warns, even for real estate loans, which the banks themselves hold, it is necessary to leave stronger than before to the risks associated with it. A faulty “risk calibration” offer the banks the opportunity to make with little equity, very large and very heavily leveraged investment in facilities. Their risk weights were close to zero, although the risks are actually significant. Thus, prior to 2008, in America, the purchase of securitizations of high-risk mortgages by systematically overoptimistic Ratings have been promoted. “The mass purchase of such papers by means of German financial institutions was an important reason for the special German affectedness by the crisis,” it says. Although there is a minimum value for the ratio of own funds to total a ssets in the amount of three percent. But it will be parked on the banking book and the trading book together. This is in many banks is not an effective barrier against taking poor risks in the trading book. The proposal of the Basel Committee’s attempts to create a remedy.

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As the Economists find fault with, handled estate loans currently flat as safer than corporate loans. They were regularly in the center of financial crises. That it was not in Germany is already open a system in crisis, “was, among other things, that the institutions of former times, still had hidden reserves, which they could use to cover the losses”. However, you would not be able to build again. “For the future it is expected that the German banks are no longer able to absorb losses due to macro-economic developments, such as declines in real estate markets, as easily as in the past.” And further it says: “an increase in the market interest rates, so it can come back to crises such as in the early 1990s.”

Not necessarily less growth

riding The economists that tighter capital regulations, to draw necessarily a weaker growth. Europe had failed after 2008, the exorbitant growth of the financial sector since 1990, the resulting excess capacity and restructure the ailing banks, or. The Americans have clearly done more for the consolidation and restructuring of their banking system. With its significantly stricter capital requirements, you would have a higher growth than the Eurozone.

The much-discussed question of whether a better account of the risks of real estate loans would meet the European financial institutions, is stronger than the American, the Advisory Board for the goal of a leader: “The typical real estate financier in Germany is not in competition with an American real estate financier.” He also goes to the Argument of the banks, equity is particularly costly. “Out of your private economic point of view, the true don’t like, from the point of view of the economy as a whole.” The costs for the shareholders, a profit of the taxpayer or of the Bank’s creditors.