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How a German Bank Lost $425M by Mistake
September 18, 2008 1:04 PM
By CHRISTEL KUCHARZ, ABC News Producer, Germany
While the German stock market is still a bit nervous and investors here are anxious about keeping their heads above water, there are some German financial institutions that see the current Wall Street crisis as a chance to enter lucrative U.S. markets.
Others, however, like the state-owned development bank KfW (Kreditanstalt für Wiederaufbau), are coming under scrutiny.
Today’s edition of the tabloid Bild Zeitung calls KfW “the dumbest bank in Germany” for losing “300 million euros [about $425 million] in an erroneous swap.”
Why?
Germans were shocked by news that the KfW Bank made an ill-timed $425 million transfer to Lehman Brothers on the very day the latter filed for bankruptcy protection.
“It’s a scandal, it’s shocking”, Bild Zeitung told its readers. “How could that possibly happen?”
The KfW bank declined to comment in detail on the transfer, citing an ongoing internal audit, but it did release a statement saying the transfer was made in a swap deal of a kind that is generally based on long-term contractual obligations.
The transfer exposed the government-owned KfW to $425 million in losses, triggering criticism from the Finance Ministry.
Ministry spokesman Torsten Albig told reporters in Berlin the news “was more than surprising and annoying and the government expects a very quick explanation how that could happen. For us, it is inexplicable.”
KfW’s administrative board is meeting today and the "erroneous transfer" is high on the agenda.
September 18, 2008 in Christel Kucharz | Permalink | User Comments (9)
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If this German Bank "see the current Wall Street crisis as a chance to enter lucrative U.S. markets," who else is also entering our so called "Lucrative" markets? It sounds like a ill-fated knee-jerk reaction to something much larger that sounds like even more questionable activities by more people, companies and countries to essentially buyout America, or at least what Americans own, or what will be left of it.
When it's phased in this perspective, it sounds like we are being sold down the river, and just do not know or understand our own value or even what's to come when we eventually own very little of what we think is ours.
Posted by: Quincy Brown | Sep 18, 2008 2:26:58 PM
OK so where is this money now?
Posted by: I'm In | Sep 18, 2008 2:27:55 PM
How curious. A new form of philanthropy to feed the creditors of the bankrupt.
Posted by: Sargon | Sep 18, 2008 3:28:47 PM
Hey Germany, don't worry. US govt owned AIG will top that. Also, if Lehman received that money, why did they still filing bankruptcy? Take the money and run?
Posted by: XxHaimBondxX | Sep 18, 2008 3:32:36 PM
"KfW’s administrative board is meeting today and the "erroneous transfer" is high on the agenda."
High on the agenda? You would think it would be tops or first, unless there are other issues.
Posted by: George | Sep 18, 2008 3:43:57 PM
This is a government owned bank in Germany. I'm not a finance law expert, but it really seems doubtful to me that this bank was making an "investment" in an American owned bank, unless U.S. federal banks are doing the same with foreign commercial banks.
This seems more like the Bush Administration trying to get the kiss-ass Merkel government to help bail out American banks, like their doing with AIG and other institutions now. Except in this case Bush apparently thought they would just let the Germans help cover the losses for Lehmans.
This administration truly has no shortage of nerve when it comes to getting taxpayers around the world to socialize the burden of losses (ONLY) to private investors.
Posted by: Dean | Sep 18, 2008 4:24:55 PM
What America is made up of today is a very large collection of passive people who tolerate big business greed coupled with the most government corruption in American history. We spent half a century fighting and denouncing communism although today we fight dictatorships in the middle east while we feed communism at the expense of the livlihoods of tens of millions of American worker's who used to be employed here as manufacturers. Back in the day when America actually had a Gross Domestic Product of substance.
Posted by: John | Sep 18, 2008 5:13:04 PM
Liberals stay or go back to Europe, we only need real mean, and women. This country was made from the best "Conservative" people from every country in the world. Time to purge ourselves of the Socialist, Communists, and other hacks that are trying to take America down. Nothing comes for free, if you can't pull up your own pants, chances are you will get screwed (Free Housing via interest only Mortgage Loans) and now the rest of us have to pay for your homes, investments etc
Posted by: Anthony | Sep 18, 2008 5:26:19 PM
AAAwwww shucks, haven't you ever misplaced $ 425 million at your place? Come on now....fess up....sure you have!
Posted by: W. Peterson | Sep 19, 2008 5:07:27 PM
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