# Bank Rescue Act, official name

- Canonical URL: https://www.gerhardmerk.de/bank-rescue-act-official-name
- Post ID: 592801
- Modified: 2023-07-25T21:00:50+00:00
- Language: en

## Definition

Finanzmarktstabilisierungsergänzungsgesetz, FMStErgG (German bank rescue law): Federal law enacted in Germany in the spring of 2009 in the wake of the financial crisis that followed the 2007 subprime crisis, containing a series of far-reaching legal provisions that in certain cases even permitted the (temporary) expropriation of a systemically important bank. The impetus for this law was the rescue of the swirling German Hypo Real Estate Holding AG, headquartered in Munich; some therefore referred to it as a "Lex HRE." - Opponents of this measure argued that it should not be up to the state to correct bad investments or poor corporate governance or to prevent a necessary structural change. On the other hand, the prevailing opinion was that - unlike an industrial company - it was probably up to the state to protect the depositors and customers of this mortgage financier and other banks from major damage. - In the summer of 2009, under strong political pressure, the EU decided to exclude from government debt the special purpose vehicles set up to bail out banks occasionally during the financial crisis, which was probably rightly criticized as a "disastrous fault" with "alarming signaling effects." - See resolvability, resolution mechanism, unified, amortization, negative, investor protection, bail-out, bad bank model, German, bank, systemic, bank bail-in, reverse, Bank triage, bank rule, golden, bank failures, bazooka, Bradford nationalization, exit strategy, financial market stabilization agency, Fortis rescue, Hypo Real Estate rescue, real estate bubble, crisis whip, last-resort provision, Mortgage equity withdrawal, ninja loans, Northern Rock debacle, payment-in-kind loan, real loan, bailout, rescue, Sifi oligopoly, sovereign liability, stability fund, European, sinking fund, corporate, state-sponsored, loss absorption, personal, asset levy, contractual fidelity, trust, Zetts, three, zombie bank, forced expropriation, forced convertible bond. - Cf. ECB Monthly Bulletin of March 2009, pp. 37 et seq. (effects of the bank rescue measures on investors' risk assessment; overviews), pp. 84 et seq. (basic information on the crisis programs), ECB Monthly Bulletin of April 2009, pp. 22 et seq. (measures taken in the course of the bank rescue in the euro area; overviews). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

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