German Politician Says Draghi is Turning ECB into Junk Bank

A leading member of German Chancellor Angela Merkel’s Bavarian sister party criticised European Central Bank chief Mario Draghi on Saturday, saying he was turning the institute into a “junk bank” with his plans to buy debt rated as junk.

In a stinging attack, Hans Michelbach of the Christian Social Union (CSU) said Draghi was endangering the stability of financial markets.

“Draghi is increasingly transforming the ECB into a junk bank,” Michelbach told Reuters.

On Thursday, the ECB laid out plans to buy rebundled packages of debt and covered bonds, secured on solid assets such as property. It will include buying debt with a “junk” credit rating from Greece and Cyprus as long as such states are under a formal international financial programme.

Michelbach, who is chairman of the conservative faction in the parliamentary financial committee, said the ECB now wanted to buy the kind of “opaque debt” that was largely to blame for the outbreak of the global financial crisis in 2007/2008.

via CNBC

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