SPD’s Gabriel: Break Up the Banks

As the "Occupy Wall Street" movement moves across the globe – including a large demonstration in Frankfurt – the leader of Germany's Social Democrats (SPD) – Sigmar Gabriel – is tapping into the populist rage against the bankers by demanding the Germany's "too big to fail" big banks be broken up. What Gabriel demands is a clear Glass-Steagall-like separation of Investment Banking from Commercial Banking:

Gabriel weiter: «Ich möchte, dass beim Geschäftsfeld des Investmentbankings ein ganz großes Schild an der Tür steht mit der Aufschrift "Hier endet die Staatshaftung".» Er habe überhaupt nichts dagegen, dass Leute mit ihrem Geld spekulierten. «Aber wenn die Zockerei schiefgeht, sollten die Spekulanten mit ihrem Geld dafür haften und nicht unschuldige Dritte», sagte Gabriel. «Was wir derzeit haben, ist ein Verlustsozialismus. Was schiefgeht, trägt die Allgemeinheit, und was gutgeht, wird privatisiert.»

(Gabriel continues: "I'd like to see a big sign on the door of the investment banks that reads "Here Ends the Government Guarantee." : He has nothing against people speculating with their money. "But when the gamble goes south the speculators need to cover the losses with their own money, rather than having an innocent third party foot the bill," Gabriel said. "What we have now is "Loss-Socialism". When things go wrong the public covers the losses, but profits are privatized.")

Gabriel can expect massive resistance from Germany's biggest bank – Deutsche Bank – which functions as the de facto economics department of the CDU/FDP coaltion government in Berlin. (see my post Josef Ackermann's Birthday Party ).  Currently Deutsche Bank's CEO Joe Ackermann is rejecting the more stringent EU capital requirements for banks, even though Deutsche Bank fails the latest stress tests.

The SPD is making hay with Ackermann's arrogance.  The Social Democrat's speaker on government budget issues – Carsten Schneider – was quick to pounce:

"Etwas Demut stünde Herrn Ackermann gut zu Gesicht.»

("Herr Ackermann could benefit from a dose of humility")