So much for the idea of a levered Euro-TARP.
German Finance Minister Wolfgang Schaeuble told lawmakers the European Financial Stability Facility would not be used to create a leveraged bailout vehicle, according to Dow Jones Newswires.
AP
Euro bills at teller window
Schaeuble was attempting to reassure members of the Free Democrat party as they prepared to vote on an expansion of the EFSF. The lower house of Germany’s parliament approved the expansion Thursday. The Free Democrats are part of the governing coalition that, along with the Christian Democratic Union and the Christian Social Union, control Germany’s parliament.
Financial regulators from the United States had reportedly been urging European counterparts to consider a leveraged fund that would issue its own bonds and use the proceeds to buy sovereign debt of distressed euro zone nations. Earlier this week, reports suggested that plans to create this fund were underway.
Now it seems like the idea is dead.
Otto Fricke, the budget policy spokesperson for the Free Democrats, described the idea of a levered fund as “nonsense.”
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