Friday, September 19, 2008

Heads roll in German Bank Scandal

Heads are rolling in the wake of the scandal surrounding the transfer of €300 million ($426 million) by KfW to Lehman Brothers on the day the financial institutions collapsed.

On Thursday, September 18, the German Economics Minister Michael Glos, announced the suspension of two managing directors, Detlef Leinberger and Peter Fleischer, as well as the head of the bank's risk-management department.

KfW is a German government-owned development bank, based in Frankfurt. It name comes from Kreditanstalt für Wiederaufbau, meaning Reconstruction Credit Institute, and it was formed after World War II as part of the Marshall Plan. The bank is well known for lending money to small and med-sized businesses - not, to failing Wall Street firms. Business leaders as well as German politicians sit on the administrative board.

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