Germany rules out joining US bank bailout plans

Sep 22, 2008, 10:50 GMT

Berlin - Germany has no plans to join in the massive US bailout operation for financial institutions that have run into difficulties, a government spokesman said Monday.

Spokesman Ulrich Wilhelm said the government saw no need for such an undertaking in Germany. A foreign ministry spokesman said the US had made no approach to the Europeans so far.

The US administration is reportedly seeking participation from other countries in a 700-billion-dollar rescue fund announced in Washington.

US Treasury Secretary Henry Paulson said some countries had signalled their readiness to help out but there had been no firm commitments.

The plan would give the Treasury Department the power to buy bad mortgage debts from troubled financial institutes to head off a disastrous credit freeze that could paralyze the international finance system.

The US government lurched from one crisis to another last week, standing by as Lehman Brothers investment bank declared its 600- billion-dollar bankruptcy and as Merrill Lynch investment bank was swallowed up by Bank of America.

It then stepped in to rescue the insurance giant American International Group Inc (AIG) to the tune of 85 billion dollars.

Markets not only in the US but around the world fluctuated wildly but returned to about where they had been at the beginning of the week after news of the rescue package emerged.

In Frankfurt, the blue-chip DAX index was down 0.03 per cent at 6,187 by early afternoon. 'Things are very quiet,' said one broker. 'The market has to digest the weekend's developments.'

Leading the way were banking shares. Commerzbank was up 3.53 per cent at 16,43 euros, Hypo Real Estate 2.76 per cent higher at 15.62 euros and insurer Allianz up 3.70 per cent at 104.23 euros.