Germany has lost its way

Germany has lost its way on Landesbank rescues. The cloud that the state-controlled banks have flown into by betting large on risky credit assets has presented one silver lining – the chance for radical reform of the sector. A shake-up has looked on the cards since the landesbanks lost their state guarantees in 2005, depriving them of access to cheap funding. But the bailouts of WestLB, the North Rhine Westphalian landesbank, and Bavaria’s BayernLB have put some early progress into reverse. Last...