German Finance Minister Peer Steinbrueck criticized bank managers for misjudging risks to their balance sheets and said prosecutors had good reason to look into the woes of German subprime casualty IKB.
In an interview with the Financial Times and its German sister newspaper, Steinbrueck said "snooty" bankers were to blame for the fallout in Germany from the crisis in U.S. mortgage markets.
"It is remarkable how much time some bank managers need to evaluate the risks," he was quoted as saying in the Financial Times Deutschland. "Months have gone by since the end of July and some managers still don't know what the impact is on their accounts."
Steinbrueck played down the risks of the crisis for Europe's largest economy, saying there were "a lot of signals" to suggest German growth would remain strong next year.
He also cautioned against getting overly concerned about price rises in the energy and food sectors, saying inflation was expected to fall below 2 percent annually next year after registering a near-14 year high of 3 percent this month.
But signs have emerged that Germany may not be as insulated from the U.S. woes as the government has said.
Two German banks -- IKB and SachsenLB -- nearly collapsed under the strains of credit market turbulence.
German state bank KfW announced earlier this week that it expected losses linked to its rescue of IKB to nearly double to 4.8 billion euros ($7.08 billion).
Steinbrueck heads the supervisory board of KfW and one of his key deputies in the finance ministry, Joerg Asmussen, sits on the board of IKB. But both have blamed poor management for the woes.
"It is clear that the management of SachsenLB and IKB didn't have the right management expertise," Steinbrueck told the FT.
German prosecutors are looking into the developments which led to the near-collapse of IKB.