Germany Says “No” to Banking Union

It didn’t take long for Germany to respond to a report from the European Commission proposing that the European Stability Mechanism be empowered to lend directly to banks. From Market News International:

The German government on Wednesday reaffirmed its opposition to allowing European Stability Mechanism, Europe’s permanent bailout fund, to directly lend to troubled banks in the Eurozone.

Government spokesman Steffen Seibert said at a regular press conference here that the German rejection of the idea of any direct recapitalisation of banks by the ESM “is well known.”

Markets reacted positively to the Commission’s report, but have backtracked since the German announcement. DJIA futures are down -107 points and Germany’s DAX is down nearly -70 points.

Paul Ausick