Britannia Radio

Brown, so far from leading the way, is going to be forced into a 
total guarrantee of all banks!  They will effectively be state 
controlled in that the government will pick up losses while leaving 
the bank executives to take the profits.

You watch the opinion polls say what a good leader we have in Gordon 
Brown when he is daily proved to be totally useless.

The Irish and the Greeks are the immediate trigger for this

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BBC Blogs  5.10.08   5.04pm
Peston's Picks

Full deposit protection is nigh
. Robert Peston

The decision by the German federal government to guarantee all 
private savings in German banks is momentous.

In a globalised banking market, in which money can leak across 
borders like a sieve, it will be almost impossible for the UK not to 
follow Germany's lead.

I would be immensely surprised if Alistair Darling, the Chancellor of 
the Exchequer, didn't announce a similar commitment within the next 
24 hours.

The formalisation of full protection for depositors throughout the 
European Union became almost inevitable after similar decisions were 
taken over the past few days by the Irish and Greek governments.

But Germany is the biggest economy in Europe, a global powerhouse, 
with a banking sector that for years prided itself on its 
conservativism.

That Germany is the first of the major European economies to provide 
100 per cent insurance to private savers shows just how fragile its 
banks have become.

The trigger for the announcement seems to have been the desperate 
straits of Hypo Real Estate, the commercial property lender whose 
rescue in jeopardy.

But that's only the trigger.

The underlying cause is a near-total collapse of confidence by 
creditors to banks and by bankers themselves.

And I hope you'll forgive my stating the blooming obvious, that 
there's an unfortunate Great Depresssion resonance in the decision of 
the German administration to stand behind all private savings.
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BBC ONLINE   5.10.08   @ 5.47 pm
Germany acts to guarantee savings

Chancellor Angela Merkel has announced that Germany will guarantee 
all private savings accounts, as a major bank struggles to stay in 
business.

Ms Merkel was speaking after an emergency meeting with the central 
bank and financial regulator.

Hypo Real Estate, Germany's second biggest commercial property 
lender, is in trouble after a 35bn euros ($48bn; £27.2bn) rescue plan 
collapsed.

Hypo has said it will study alternative measures to fund its business.

Ms Merkel had previously been strongly critical of the Irish and 
Greek governments' decisions to take independent action to protect 
all savings deposits.

BBC business editor Robert Peston says the German decision is 
momentous, and that all other EU countries - including the UK - will 
almost certainly follow suit.
"We will not allow the distress of one financial institution to 
distress the entire system. For that reason, we are working hard to 
secure Hypo Real Estate," Ms Merkel said.

The BBC's Tristana Moore in Germany says the government is under 
intense pressure to save the bank before markets reopen on Monday.

'Irresponsible'
The collapse of Hypo Real Estate will put further strain on other 
financial institutions in other countries, struggling against a 
crisis of confidence in the global financial system.

Ms Merkel also said that managers at financial institutions should be 
held accountable for "irresponsible behaviour".

Hypo's problems should have been revealed earlier, a minister says
Finance Minister Peer Steinbrueck said he was "appalled" that the 
problems had not been revealed earlier.

Hypo Real Estate relies heavily on borrowing from other banks to fund 
its business and has suffered badly as banks have become increasingly 
cautious about lending to each other.

Just last week, the firm announced that it had succeeded in securing 
a credit facility worth 35bn euros stitched together by the government.

Under the deal, the government was going to provide the lion's share 
of the loan, with a consortium of banks providing 8.5bn euros.

It was designed to make sure that Hypo Real Estate had sufficient 
short and medium-term funding to make sure it could function while 
the international money markets remained in a deep freeze.

But Hypo Real Estate said the banks had withdrawn support for the 
loan, putting the whole rescue package at risk.

On Saturday, leaders of the major European economies met in Paris for 
talks hosted by French President Nicolas Sarkozy.
Britain, Germany, Italy and France all agreed to work together to 
support financial institutions - but stopped short of agreeing US-
style bank bail-out plan.

They decided instead to seek a relaxation of the EU rules governing 
the amount of money individual states can borrow.

The leaders also issued a joint call for a G8 summit "as soon as 
possible" to review the rules governing financial markets