German finance minister blames 'snooty,' secretive bankers

'Snooty' Bankers Blamed for Crisis

By Ralph Atkins and Bertrand Benoit
Financial Times, London
Thursday, November 29, 2007

http://www.ft.com/cms/s/0/9a9446ae-9ec8-11dc-b4e4-0000779fd2ac.html?ncli...

BERLIN -- The "snooty" attitude of bankers and financiers who thought they were more clever than everyone else is largely to blame for the global credit squeeze "disaster," Germany's finance minister has said.

In an interview with the Financial Times, Peer Steinbruck played down the impact of the turmoil on Europe's largest economy but said steps had to be taken to raise risk awareness.

German proposals before the squeeze for increasing transparency had been "mocked" and sometimes deliberately misunderstood as an attempt to impose regulation rather than voluntary codes, Mr Steinbruck said, but were now winning support.

In a swipe at finance industry leaders, he said the "quality of managers" had proved a weakness. "The snooty attitude that we have sometimes seen -- under the motto of 'we are cleverer than the others' -- ended in disaster," he said.

Mr Steinbruck's comments came as IKB and WestLB, the German banks hit hard by the turmoil, pledged more capital to cover potential losses, and Rolf Gerlach, the chairman of WestLB, resigned unexpectedly.

After talks with the Bundesbank and the financial regulator, the banks that rescued IKB said they would cover a further $520 million of possible losses in addition to their E3.5 billion ($5.1 billion) rescue.

Mr Steinbruck was critical of the management of Sachsen LB and IKB. "It is clear that the management ... didn't have the right management expertise," he said. They had been unable to cope with the complexity of the products in which they were investing, he said. Crisis talks on IKB's future took place on Thursday but Mr Steinbrück said taxpayers would not foot a rescue bill.

The Bundesbank warned that financial market turmoil had "noticeably" increased macro-economic risks to the German financial system but the economy remained in good shape.

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