Mortgage Crisis

Germany has no plans to join in the massive US bailout operation for financial institutions that have run into difficulties with risky mortgage debt, officials said Monday, Sept 22.

The six Group of Seven economic powers aside from the United States do not plan any measures comparable to a US package to support the banking sector, German Finance Minister Peer Steinbrueck said on Monday.

Ulrich Wilhelm, a spokesman for German Chancellor Angela Merkel, too said the government saw no need for such an undertaking in Germany.

US reportedly seeking help

A foreign ministry spokesman said the US had not approached Europeans on the issue so far.

The US administration reportedly wants other countries to come up with rescue plans similar to a $700 billion (480 billion euro) rescue package announced in Washington on Sunday.

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

Plan aims to head off credit freeze

The US rescue plan, which must still be passed by Congress, 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 bring the international finance system to its knees.

Finance Minister Steinbrueck added that the US plans were very important to stabilizing markets. There is no reason to fear a credit crunch in Germany, he added.

The US government lurched from one crisis to another last week, standing by as Lehman Brothers investment bank declared its $600 billion 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.

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.

EU welcomes bailout plan

The EU Commission welcomed the bailout plan when it was announced.

EU spokesman Johannes Laitenberger said the EU executive "welcomes U.S. action to stabilize the financial system" and would continue to follow the situation closely and attentively.

But he would not comment on the details of the plan because the situation is still evolving, he said.

After Paulson called on other countries to come up with similar plans to help stabilize the global financial system, Laitenberger said this is "not a question that falls directly under the commission's competence."

Merkel wants tighter regulation

German Chancellor Angela Merkel on Monday reiterated calls for more transparency and tighter regulation of markets.

Over the weekend, the chancellor was unusually critical of the US for failing to heed calls to improve regulation of hedge funds and implement more stringent financial controls.

German politicians remain wary of the US bailout and have ruled out any participation.