10/4/2014 ECB becoming junk bank under Draghi: Merkel ally

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ECB becoming junk bank under
Draghi: Merkel ally
Gernot Heller
5 Hours Ago
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Dursun Aydemir | Anadolu Agency | Getty Images
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.
ECB reveals asset purchase plan, skimps on detail
"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.

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10/4/2014 ECB becoming junk bank under Draghi: Merkel ally
http://www.cnbc.com/id/102059651?trknav=homestack:topnews:6 2/3
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.
Draghi: ECB to purchase asset-backed securities
"Draghi, a former investment banker, has not learnt anything in his role as
head of the ECB. He was and still is the wrong person for the job,"
Michelbach said.
With its "Draghi politics", the ECB is helping countries that are not
reforming, he said.
"Draghi is ridiculing the people in Europe who have taken burdens upon
themselves to shore up the future of their countries by means of reforms,"
Michelbach added.
He said the planned purchases of debt, which the ECB hopes will boost
lending and so boost the euro zone economy, would mobilise "not one
single extra euro of loans" in the single currency bloc.
"Draghi looks like he is at his wit's end and he's trying to cover it up by
performing increasingly absurd pirouettes," Michelbach said.
"The ECB needs to change its policies so that they come back within the
terms of the treaties."
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10/4/2014 ECB becoming junk bank under Draghi: Merkel ally
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