Germany: How to burn 300 Million of Taxpayer’s money in a second

I guess everybody in the banking world around the globe has heard about the Lehman bankruptcy latest this Monday morning, everybody besides Germany’s largest government owned bank - KfW.

In an attempt to win the Darwin award for banks or by taking the name of the bank to literally (KfW - translated: Bank for Reconstruction), they transferred 300 Million Euros to already bankrupt Lehman during Monday. At the same time their government colleagues were closing the German Lehman subsidiary.

Officials were quick to describe the matter as a “mistake“, but the loss of another 300 Million comes at a time when politicians are still trying to pour oil on troubled water after KfW has just flogged its troubled subsidiary IKB to US private equity firm Lone Star at cost of at least EUR 10 Billion of taxpayer’s money.

From the KfW web site:
Providing Support through Banking Expertise
KfW Bankengruppe gives impulses for the economy, society and ecology in Germany, Europe and the world over. It supports change and promotes promising ideas.

The payment was part of a SWAP deal between Lehman and KfW and it is currently not clear if the amount was collateralized or otherwise secured. It looks like the politicians that are part of management board of the bank, particularly the German economics minister who is head of this illustrious circle, are currently desperately searching and in need of a few scapegoats to blame the repeating disasters on.

Our advise: Finally get some professionals in to do the work - or as the Americans say: Help from professionals or professional help.

But for those in charge that are, seemingly without any accountability, blowing billions of taxpayer’s money it might - in their houses of mirrors - look like as if such kind of losses have become “business-as-usual”. And these losses are just the tip of the iceberg of disasters created in the last years.

More information:
KfW Group web site

Update 19-Sep-2008 20:00 (UTC):
In the meantime officials have declared direct losses of KfW linked to the Lehman bankruptcy to be about EUR 536 million. Two directors of the bank and the head of the risk / controlling department were fired yesterday for the money transfer to Lehman on the day of bankruptcy. To top the whole thing - Lehman originally did not accept the transferred amount - it had to be sent again.

None of the management board members has so far seen any need for consequences with regards to themselves. They claim that the management board was provided with very little information to actually fulfill their oversight function.