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View Full Version : Reuters: Berlin eyes jail time for reckless bankers - source




sailingaway
02-06-2013, 03:14 PM
Feb 4 (Reuters) - The German government will discuss a new law to imprison bank executives for up to five years if they are found guilty of reckless behaviour that put a bank at risk.

"We've found a regulatory gap here that we want to close," a senior government official in Berlin said on Monday.

According to the draft regulation to amend Germany's banking law, which the cabinet will discuss on Monday, a manager may face a jail sentence if he deliberately ignored risk rules and thereby risked the collapse of a financial institution.

The cabinet is also due to take up Finance Minister Wolfgang Schaeuble's plans to force big banks to separate their riskier trading activities from their deposit-taking business.

"We want to send a signal to Europe with this," the government source said, adding that EU moves in this direction "have not been fast enough".

Berlin has been seeking a common position with the French government over how to apply new European Union bank safety rules. By aligning the German proposal to a proposed French model, large European banks will be spared some of the tougher ring-fencing moves outlined by the EU's Liikanen group.

The government source said any change in German rules would apply to more than three lenders, more than expected. So far, banking observers had seen any change being limited to Deutsche Bank, Commerzbank and the country's biggest landesbank lender, LBBW. (Reporting By Gernot Heller; Writing by Edward Taylor and Jonathan Gould; Editing by Christian Kraemer and Maria Sheahan)


http://www.reuters.com/article/2013/02/04/banks-germany-penalties-idUSF9E8LM00620130204

Confederate
02-06-2013, 03:20 PM
In Germany managing directors, executives, and owners are already legally liable for their companies. If you're the CEO and the company goes out of business because of your mismanagement you can go to jail AND your assets can be seized to pay creditors.

This happened to my dad. He was part owner of a company in Germany and the managing director ran the company into the ground almost overnight and the guy was held personally liable. He had his house, car, savings, everything basically seized to pay back company creditors. The guy escaped jail time, though.

MRK
02-06-2013, 03:30 PM
All of this sounds like a great way to knock your competition out of the playing if you're well connected. And it makes it so you have to be SURE you donate to the ruling party's campaigns so that you can be sure you won't get punched out if you're a big player in the banking sector.

SpreadOfLiberty
02-06-2013, 03:32 PM
Sorry, the conservative part of me just prevents me from getting on the "jail the bankers" meme.

sailingaway
02-06-2013, 03:38 PM
I'm not sure what I think of it. I think govt should stay out of failing companies but that would also mean not bailing them out. I see this as a consequence of permitting that sort of bad policy. Now fraud and breech of fiduciary duty, we have always had, so.....

MoneyWhereMyMouthIs2
02-06-2013, 03:53 PM
CRIMES and FRAUD are the problems, not recklessness.