German Parliament agrees to Merkel rescue plan
The German Parliament lower house signed off Friday on Chancellor Angela Merkel's 500-billion-euro (683.1-billion-dollar) bank rescue package aimed at shoring up international investor confidence following weeks of share market turmoil, reported dpa.
Merkel unveiled the plan on Monday as part of a concerted effort by governments around the world to stabilize markets and to help troubled financial institutions limp through the crisis, which was triggered last year by an upheaval in the risky US subprime mortgage business.
But speaking in parliament Friday, German Economics Minister Michael Glos insisted that the government's plan was aimed at protecting the nation's citizens rather the bankers.
He went on to say there was no reason for pessimism about the outlook for the economy.
"The opposite," he said, "we can solve the problems."
The German government's package includes a raft of measures such as state guarantees to help ease the impact on banks of the global credit squeeze and moves to recapitalize financial houses.
The Bundestag, which is the lower house of the German Parliament, agreed to the plan amid signs of an element of calm returning to European share markets Friday after days of turbulence.
However, the German parliament's backing for the plan is unlikely to save Europe's biggest economy from a sharp downturn as the financial crisis hits growth around the world.
In the run-up to the plan's passage through parliament, the German Government slashed its 2009 economic growth forecast to a feeble 0.2 per cent.
The rescue package's passage through parliament came after Merkel saw off a rebellion Thursday by premiers of Germany's 16 states over the funding the plan.
The Berlin action plan comprises 400 billion euros in guarantees, a 70-billion-euro fund and 10 billion euros of leeway.
The government is determined to bring the action plan into law as quickly as possible with the upper house of the parliament, the Bundesrat, also due to agree to the plan later Friday.
German President Horst Koehler is expected to sign the package into law also on Friday.
Berlin also plans to create a special agency to oversee the bank rescue plan.
The German government said it will need a credit of 100 billion euros to operate the bank-support scheme, but the trading fund will earn interest and dividend income from banks it takes over.
The ultimate net cost may be far less than the credit sum.