German Banks, or Good/Bad/F**ked Bank, Redux

Good piece in Der Speigel today on German bank debt and the good/bad/fucked bank model there:

All the country’s top commercial banks and the publicly owned regional banks known as Landesbanken took part in the survey which revealed that the banks hold so-called "toxic" securities totalling just under €300 billion ($398 billion), of which only a quarter has been written off.

…The Finance Ministry in Berlin estimates that the entire German banking sector is still holding risky securities totalling up to €1 trillion. Given that volume, Finance Minister Peer Steinbrück of the center-left Social Democrats, believes it would be irresponsible for the government to set up a so-called Bad Bank as a repository for toxic assets stemming largely from the devastated subprime mortgage market, as banks have suggested.

"In the worst case that would cause the federal government debt to more than double," said one member of Steinbrück’s staff. At present the federal government debt amounts to almost €1 trillion.