As the problems surrounding Lehman Brothers (LEH) grew ever more apparent, most of Lehman’s counterparties stopped doing business with the company. But government-owned German bank KfW Bankengruppe is in hot water for approving an automated transfer of 300 million euros ($426 million) to Lehman just as the U.S. I-bank was going bankrupt. NYT:
The $426 million payment, described by the bank, KfW Bankengruppe, as an “automated transfer,” provoked an outcry across the political spectrum. The largest-circulation German newspaper, Bild, splashed a headline across its front page Thursday calling KfW “Germany’s dumbest bank.”
The bank’s administrative board, made up of politicians and business leaders, met in Berlin amid calls for dismissals and resignations.
Two of the bank’s managing directors and the head of the risk-control department were suspended, the economy minister, Michael Glos, who heads the board, announced after the meeting.
The German finance minister, Peer Steinbrück, said of the suspensions, “That’s not the final word.”
The transfer was part of an automated currency swap which management (somehow) neglected to cancel. The German lender is hoping to get at least some of its money back, though its not clear how much.
Perhaps Lehman shareholders can find some comfort in this. As bad as Dick Fuld was, he never did anything this stupid…
(Well, OK, of course he did. In fact, much stupider…)
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