Bank of America is nixing its plans to charge a $5 debit card fee.
The bank says in a statement that the decision to scrap the plan came after listening to customer feedback in recent weeks.
The news comes after other major banks, including Chase and Wells Fargo, said last week that they were canceling tests of similar fees.
“Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so,” David Darnell, co-chief operating officer, said in a release.
The about-face by the banking industry comes amid growing public anger over fees. A movement to get customers to switch to credit unions had marked this Saturday as “Bank Transfer Day.”
As Europe’s leaders struggle toward a solution to its debt crisis, hopes are growing that cash-rich China will take a major role in a rescue _ expectations that are likely to be dashed.
On Friday, the chief executive of Europe’s bailout fund visits Beijing to talk to potential investors. Beijing has expressed sympathy for the 27-nation European Union, its biggest trading partner, but has yet to commit any cash.
Joining in a bailout could help Beijing in its campaign to join the top ranks of governments that manage the global economy _ a leadership role that many around the world have been urging China to take.
So far, Beijing has promised to help only by continuing business as usual, trading with Europe and stockpiling some of China’s multibillion-dollar trade surpluses in the safest European government bonds.
“For China, this could be a very big break in its efforts to take the seat at the head of the table in the international monetary hierarchy,” said Carl Weinberg of High Frequency Economics in a report.
Still, getting directly involved would put Chinese leaders in a position that is fraught with political risk _ spending public funds to bail out European countries that despite their debt crisis are still far richer than China per person.
Managers of China’s sovereign wealth fund, a potential investor, have tried to maintain an image as careful financial guardians after they faced criticism when early investments abroad failed to perform well.
During a visit to Paris this month, the Chinese fund’s chairman said Europeans should “respect yourself” and stop “expecting charity from China.”
European leaders are looking for investors outside the 17 nations that use the euro common currency, including sovereign wealth funds, for a fund to backstop the main bailout fund, the European Financial Stability Facility.
That is part of a complex plan under development to have the EFSF act as an insurer for bonds issued by weaker governments such as Italy and Spain, making them more attractive to investors.
The head of the EFSF, Klaus Regling, is due to explain the insurance scheme during his visit Friday to Beijing.
On Thursday, French President Nicolas Sarkozy was set to telephone his Chinese counterpart, Hu Jintao.
Even if China contributes, Beijing needs to limit its risk, said Huang Wei, an economist at the Chinese Academy of Social Sciences, a government think tank. She said that could mean the best Europe could hope for is a Chinese purchase of bonds guaranteed by the region’s stronger governments.
“I don’t think the Chinese government will invest directly in sovereign debt, such as Greek debt, because that’s very dangerous,” she said.
Still, China’s robust economy and $3.2 trillion in foreign reserves have fueled hopes in weaker economies that Beijing might emerge as a last-minute alternative to European aid and austerity measures that have fueled protests guaranteed online personal loans.
“You will hear some less-serious people in Ireland or Greece say, We don’t need you Europeans with your conditions because the Chinese will bail us out,” said Katinka Barysch, an analyst at the Centre for European Reform, a think tank in London.
But the vast scale of Europe’s needs _ as much as 1 to 2 trillion euros for the bailout fund _ makes that unrealistic, Barysch said.
“This is just not something the Chinese will give them,” she said.
China’s foreign and finance ministries did not respond Thursday to questions about whether Beijing would contribute to a bailout and the status of talks with Europe.
Asked on Wednesday about a possible Chinese role in a European bailout, foreign ministry Jiang Yu expressed hope the crisis could be resolved by the EU.
“I believe the Chinese side, with an open attitude, will discuss with the European side multiple ways of cooperation,” Jiang said.
Some Europeans are looking to Chinese companies, still financially strong after the 2008 global crisis battered Western business, as potential buyers of public assets such as power companies that might be sold to raise money.
But Chinese buyers that picked up European companies and other assets earlier at fire-sale prices have run into trouble managing them. They have shifted to pricier but more reliable blue-chip acquisitions such as China National BlueStar Corp.’s purchase this year of Norway’s Elkem, a maker of silicon and carbon parts, for a hefty $2 billion.
Chinese help also might carry a political cost, which has sparked unease for some in Europe.
Last month, Wen Jiabao repeated Beijing’s longstanding appeal to Europe to grant it market economy status _ a move that would make it harder for European companies to press trade complaints against Chinese rivals _ though he refrained from linking it directly to possible Chinese help in the debt crisis.
The top EU economic official, Olli Rehn, has distanced himself from a proposal floated by Brazil for China and other developing countries to jointly contribute.
“That would however have very far-reaching political consequences,” Rehn said in an Oct. 21 interview with Handelsblatt, a German business newspaper.
“It would mean that the Chinese, the Russians and Brazilians would indirectly have a place at the table in the eurozone,” Rehn said. “Such a decision would have strategic significance that is not to be underestimated.”
Stock indexes closed at the highest point since the U.S. debt limit showdown in August Monday. The market was driven higher by a round of big corporate takeovers and reports that Europe’s bailout fund will be larger than originally thought. The Nasdaq composite turned positive for the year.
Netflix Inc. plunged 22 percent in after-hours trading after the DVD-by-mail and video streaming company forecast a sharp drop in fourth-quarter profits.
Investors are still waiting for a resolution to Europe’s debt problems. European leaders said they made progress at a weekend summit and plan to unveil concrete plans for containing the crisis by Wednesday.
The Dow was up about 40 points in the first hour of trading but moved steadily higher through midday following reports that Europe’s takeover fund will be greatly expanded. It finished with a gain of 104.83 points, or 0.9 percent, at 11,913.62.
“The market is expecting that there will be some kind of deal worked out Wednesday,” when European financial ministers are scheduled to meet, said Uri Landesman, president of Platinum Partners. “If there’s not a deal by then, the market is going down significantly.”
Even with concerns about Europe, U.S. companies are still reporting bigger profits. “Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point,” Caterpillar Chief Executive Doug Oberhelman said.
The maker of construction equipment reported a 44 percent surge in income, more than Wall Street analysts were expecting, thanks to strong growth in exports. The company said it expected the global economy to continue recovering, albeit slowly. Caterpillar jumped 5 percent, the most of the 30 companies in the Dow.
The Standard & Poor’s 500 index rose to 1,254.19. That is just 3.45 points, or 0.3 percent, below where it started the year. It’s the highest close for the S&P 500 since Aug. 3, just as Washington was resolving a showdown over raising the country’s borrowing limit. If the S&P 500 finishes the year with a gain, it will be its biggest turnaround since 1984.
The Nasdaq composite rose 61.98, or 2.3 percent, to 2,699.44. The gains turned the Nasdaq positive for the year. The S&P 500 is the only major market index that remains lower than where it started the year.
The Russell 2000 index of small companies rose 3 payday loans.3 percent as investors moved money into higher-risk assets.
Netflix sank 21.6 percent post-market trading after forecasting fourth-quarter income that was far below what analysts were expecting. Through Monday’s close the stock had plunged 59 percent since July 12, when it raised prices and announced a plan to break its DVD-by-mail business into a separate company. The company abandoned the plan after it triggered a revolt among subscribers.
Other major U.S. companies due to report earnings this week include UPS Inc., Ford Motor Co. and Procter & Gamble.
Analysts expect companies in the S&P 500 to report earnings growth of 14 percent for the third quarter, according to data provider FactSet. They expect a 10 percent gain in revenue.
Expenses are also expected to climb. Higher costs for raw materials helped drag down income 8 percent at Kimberly-Clark Corp., which reported results Monday. The stock fell 5 percent. The company is a major consumer products maker whose brands include Huggies and Kleenex.
Higher costs also hurt cigarette maker Lorillard, which reported a 3 percent drop in income. Lorillard’s stock fell 0.6 percent.
A series of corporate deals helped lift the market, said Phil Orlando, chief equity strategist at Federated Investors. “This is telling us that companies think stocks are cheap, and they’re willing to spend some of the cash that’s sitting around on their balance sheets,” he said.
Deals announced included:
_ HealthSpring Inc. jumped 34 percent after Cigna Corp. said it will buy the health insurer for about $3.8 billion in cash. Cigna rose 1.4 percent.
_ RightNow Technologies Inc. gained 19 percent after Oracle Corp. said it will buy the tech service company for about $1.5 billion. Oracle rose 2.3 percent.
_ Mattel Inc. rose 2 percent after it agreed to buy Hit Entertainment, the owner of the Thomas & Friends and Barney brands, for $680 million in cash.
_ The J.M. Smucker Co. added 0.7 percent after it bought most of Sara Lee Corp.’s North American foodservice coffee operations for about $350 million.
Five shares rose for every one that fell on the New York Stock Exchange. Volume was average at 4.2 billion shares.
France’s finance minister said Tuesday that 2012 growth may be lower than estimated, a day after a leading agency warned that it may put the country’s cherished triple-A rating on notice for a possible downgrade.
Ahead of the 2012 budget debate in parliament, Finance Minister Francois Baroin warned on France-2 television that the growth estimate of 1.5 percent for next year was “probably too high.”
He blamed the risk of a global slowdown, which he said could be “very vast” and “severe.”
Baroin said the government would “put everything in place to avoid falling into a recession… and to protect our country from a downgrade” of its triple A rating, a day after Moody’s said it was assessing the country.
However, Baroin said he wouldn’t change the forecast just yet, especially in the run-up to the meeting of eurozone leaders in Brussels this Sunday and the early November meeting of the Group of 20 leaders from the industrial and developing world.
“If we are capable in the next two weeks of …. measures powerful enough to stop speculation so that we can make people understand that we will not let 60 years of European construction collapse … then I will have no worries, there will be growth in 2012 and 1.5 percent will be achieved,” he said.
Being the eurozone’s second largest economy, France could well have a big bill to pay for sorting out Europe’s debt crisis.
It’s in that context that Moody’s said it will be studying whether to put France’s rating on notice for a possible downgrade over the next three months. It said it will focus in on the government’s ability to implement its fiscal and economic reforms as well as any other potential adverse economic or financial market developments.
It said the French government has much less room for maneuver in terms if stretching its balance sheet than it had in 2008 Low fee payday loans.
“France may face a number of challenges in the coming months _ for example, the possible need to provide additional support to other European sovereigns or to its own banking system, which could give rise to significant new liabilities for the government’s balance sheet,” Moody’s said.
Moody’s warning comes ahead of Sunday’s meeting of eurozone leaders in Brussels. For days, markets have been hopeful that they would unveil a comprehensive solution to Europe’s debt crisis that would include a big ramp up in the bailout fund, a recapitalization of a large segment of the banking sector and a strategy for Greece.
However, on Monday German officials sought to downplay market expectations and the market mood has turned sour once again. France’s CAC-40 index of leading shares was underperforming its main peers in Europe on Tuesday, trading 1.7 percent lower as against the 0.6 percent fall on the German DAX.
Ahead of the meeting on Sunday in Brussels, the markets will be closely monitoring comments from all round Europe.
Jan Kees de Jager, the Netherlands finance minister, said the meeting needs to produce concrete results even though his counterpart in Germany, Wolfgang Schaeuble, said Monday that the weekend summit would not provide a “definitive solution.”
De Jager is quoted in Germany’s Die Welt newspaper Tuesday as saying that the markets “are awaiting a long-term solution. The overall package must involve a wide-reaching and irreversible agreement over enhanced controls in the eurozone in the future.”
____
David Rising in Berlin contributed to this story.
BlackBerry services buzzed back to life across the world Thursday, after a three-day outage that interrupted email messages and Internet services for millions of customers.
Research In Motion Ltd., the Canadian company that makes the phones, posted a statement that says services are improving.
Many BlackBerry users have been unable to send and receive emails and messages in an outage that started Monday in Europe. Web browsers haven’t been working either. On Thursday morning, BlackBerry users on Twitter and online forums were reporting that their phones were buzzing with incoming messages again.
RIM co-CEO Mike Lazaridis apologized for the outage in a video posted to the company’s site Thursday morning.
“It’s too soon to say that this issue is fully resolved,” Lazaridis said. “I’d like to give you an estimated time of full recovery around the world, but I cannot do this with certainty at this time.”
A crucial link in BlackBerry’s European network failed Monday, and a backup also failed. Although the underlying issues were quickly repaired, the system had built up a backlog of emails and messages that needed to be wound down. Meanwhile, messages destined for Europe were piling up at BlackBerry data centers in the rest of world. By Wednesday, the outage had spread to the U.S. and Canada, slowing service to a crawl there.
RIM shares were down 35 cents, or 1.5 percent, at $23.53 in premarket trading in New York. Investors have taken the outage in stride, figuring that it’s only one of many problems RIM is facing. The shares are up slightly since the outage began.
The maker of BlackBerry smartphones says the problems that have plagued users worldwide were caused by a core switch failure within the company’s infrastructure.
Research in Motion Ltd. says that a transition to a back-up switch did not function as tested, causing a large backlog of data.
In an update Tuesday, it said it is now working to clear the backlog and restore normal service as soon as possible.
Large numbers of BlackBerry users in Europe, the Middle East, Africa, India, Brazil, Chile and Argentina are experiencing problems for a second day, with many unable to access email and messaging services.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
LONDON (AP) _ BlackBerry’s woes spread on Tuesday as the smartphone’s maker reported service disruptions for a second straight day in Europe, the Middle East and Africa and fresh problems in Latin America and India.
Research in Motion Ltd., which makes BlackBerry devices, acknowledged there were ongoing problems Tuesday, hours after it said services were operating normally and the cause of delays in subscriber services a day earlier had been resolved.
“Some users in Europe, the Middle East and Africa, India, Brazil, Chile, and Argentina are experiencing messaging and browsing delays,” the company said in a statement, adding that it is “working to restore normal service as quickly as possible payday loans.”
Research in Motion Ltd. also apologized for “any inconvenience,” as Twitter and the Internet lit up with condemnation over a delayed response to problems some users had reported for hours.
In Britain, Vodafone UK told customers via Twitter that service was not fully restored. Rival T-Mobile UK blamed “a European-wide outage on the BlackBerry network” which it said was affecting all mobile operators. There were also reports of problems elsewhere in Europe, such as Spain.
In addition, the disruptions were experienced in the Middle East and Africa.
Etisalat, which operates in the United Arab Emirates, apologized for “the further interruption” to Blackberry services, “once again due to RIM problems.”
And Kenya’s Safaricom Ltd. said on Twitter that its Blackberry customers were experiencing a “technical fault,” while South Africa’s Vodacom told subscribers the issues were affecting multiple networks and countries.
There were no reports of any problems in the U.S.
Angry smartphone users took to Twitter to vent frustration with the company and bemoaned the loss of their messaging capabilities, questioning why the company took so long to restore services.
Pancreatic cancer is notoriously lethal _ there are almost as many deaths from it each year as there are new cases. The deaths this week of Apple founder Steve Jobs and Nobelist Ralph Steinman bring unusual attention to this less-well-known type of cancer that has actually been declining despite no big advances in treatment or finding it early.
A decline in smoking, one of the top risk factors for the disease, may be behind the drop in cases.
Jobs lived more than seven years after being diagnosed with a neuroendocrine tumor _ a less common, slower-growing and more treatable type of pancreatic cancer than the kind that killed Steinman a week ago and actor Patrick Swayze two years ago.
The Apple chief kept details of his illness behind a firewall and declared he was cured after cancer surgery in 2004. However, five years later, gaunt and having lost a lot of weight, Jobs had a liver transplant. Experts said it was likely because his cancer had returned or spread.
A liver transplant sometimes can cure the type of cancer that Jobs had. But if it comes back, “it’s usually in one to two years,” said Dr. Michael Pishvaian of Georgetown University’s Lombardi Comprehensive Cancer Center.
In January, Jobs announced his third and final leave of absence. He resigned in August and died on Wednesday.
Part of what makes pancreatic cancer so deadly is that the pancreas is as vital as the heart. You can live with just part of a liver or a colon, or only one kidney or lung. But the pancreas is a fish-shaped organ that makes digestive enzymes and insulin and other hormones that enable the body to make energy from food.
In the United States, pancreatic cancer is the fourth leading cause of cancer deaths. About 44,030 people will be diagnosed with it and about 37,660 people will die of it this year in the U.S., the American Cancer Society estimates.
Possible symptoms are fatigue, back pain, abdominal pain, unexplained weight loss, loss of appetite, jaundice and nausea, according to the Lustgarten Foundation, a private group that finances research on the disease.
This cancer often is not found until it is advanced or has spread, and overall survival is dismal: 20 percent after one year and only 4 percent after five years.
However, with a neuroendocrine tumor like the one Jobs had, “people can live a longer time; median survival is five to eight years,” said Dr. Alan Venook, a pancreatic cancer specialist at the University of California, San Francisco.
The lifetime risk of developing pancreatic cancer is about 1 in 71, according to the cancer society. Men and blacks account for more cases than women and whites, possibly because of differences in smoking rates unsecured personal loans. Smokers have two to three times more risk of developing the disease. Use of smokeless tobacco also raises the risk.
Obese people, those who don’t exercise much and diabetics also have more risk for pancreatic cancer. Alcohol use might play a role: Most studies haven’t tied it to pancreatic cancer, but heavy drinking can lead to diabetes and liver and pancreas problems that pose a cancer risk, the cancer society says.
The best hope for a patient is that the tumor is operable. That was the case in February 2009, when U.S. Supreme Court Justice Ruth Bader Ginsburg had a small, early-stage pancreatic tumor removed at New York’s Memorial Sloan-Kettering Cancer Center.
On the horizon are immune system treatments _ research that Steinman, the Nobel recipient from Rockefeller University in New York, was studying in the lab and trying on his own pancreatic cancer.
The immune system has a hard time recognizing and fighting cancer because the enemy is not an invading germ but our own cells gone rogue. Treatments called therapeutic cancer vaccines are ways to modify cells to help the immune system recognize the risk.
One such vaccine by NewLink Genetics, a small biotech firm in Ames, Iowa, is in late-stage testing now for pancreatic cancer. The company website says the larger study was initiated after a mid-stage test suggested improvement in survival.
Dr. Roderich Schwarz, chief of surgical oncology at the University of Texas Southwestern Medical Center in Dallas, has enrolled a few patients in some immune therapy studies, which have not paid off in the past.
“Vaccines are coming along,” and last year’s approval of one for advanced prostate cancer suggests researchers may be learning to overcome some of the drawbacks of the past, he said.
“It’s quite possible that vaccines will claim their territory in the treatment of these challenging tumors,” Schwarz said. “It’s still in the development stage rather than the proven stage.”
___
Online:
Cancer Institute: http://www.cancer.gov/cancertopics/types/pancreatic
Cancer Society: http://www.cancer.org/Cancer/PancreaticCancer/index
Survival rates: http://bit.ly/oAxKl5
Research and support: http://www.curePC.org and http://www.lustgarten.org
Vaccine study: http://www.linkp.com/products/hyperacute-pancreas.html
The Standard & Poor’s 500 index fell 1.6 percent early Tuesday, bringing it into what many consider to be a bear market. The yield on the 10-year Treasury note fell near a record low as investors piled into lower-risk assets.
Stocks fell broadly as investors worried that Greece might be edging closer to default, which would cause heavy losses for banks that hold Greek debt and rattle global financial markets. Greece has said it wouldn’t be able to make budget cuts it had agreed to as part of a deal to receive emergency loans.
The S&P 500 fell 20 points, or 1.8 percent, to 1,079 as of 10:15 a.m. That brought the widely used index 21 percent below its April 29 high of 1,363, meeting the criteria of a bear market.
The Dow Jones industrial average lost 207, or 1.9 percent, to 10,448.The Dow is 18 percent below its recent peak, just shy of the 20 percent decline market watchers consider to be a bear market.
The Nasdaq composite dropped 28, or 1.2 percent, to 2,307.
Bank of America fell 3.9 percent, the most of the 30 stocks that make up the Dow average. American Express Co. and General Electric Co. each lost 3 percent.
The yield on the 10-year Treasury fell to 1.72 percent, just above its record low of 1.71 percent reached on Sept. 22. Bond yields fall as prices rise.
In testimony before Congress, Federal Reserve Chairman Ben Bernanke said the economy is weaker than the central bank expected and that poor job growth continues to undercut consumer confidence. He warned Congress that deep spending cuts may impede a recovery.
In corporate news, Apple Inc. is widely expected to announce the newest version of its iPhone Tuesday. Tim Cook, who took over the company’s CEO role from co-founder Steve Jobs in August, is expected to unveil the new smartphone at Apple’s Cupertino headquarters. The company lost 0.6 percent in early trading.
Bank of America Corp. lost 7 percent to $5.15 as investors continued to be troubled by its exposure to soured mortgages securities and a several-day outage of its website. The company’s stock lost 9 percent Monday to $5.53, a level not seen since 2009.
European indexes also declined sharply. Benchmark indexes in Germany, France, and Spain each lost more than 3 percent.
Two children and their parents were killed by machine-gun fire Saturday while trying to flee Moammar Gadhafi’s hometown along with hundreds of other residents, as forces loyal to the ousted regime engaged in heavy clashes with revolutionary fighters surrounding the city.
Their bodies were brought to a makeshift hospital outside Sirte, said a doctor there, Nuri Naari. They were hit by machine-gun fire as they drove toward the positions of revolutionary forces on the edges of the city, he said. It was unclear who killed them.
Sirte is one of the last cities to remain in loyalist hands. After months of stalemate in Libya’s civil war, anti-Gadhafi forces swept into the capital in August and their leaders set up a transitional government. But the continued fighting in holdout cities and the failure to find and capture Gadhafi has kept Libya’s new leaders from being able to declare victory.
Revolutionary forces had given families inside Sirte two days to leave the city starting Friday, said Mustafa Abdul-Jalil, head of the National Transitional Council that now runs the country. They tried to keep a safe corridor open for civilians fleeing the coastal city.
“This period will give a chance for families to leave the areas of fighting,” he said at a press conference Saturday.
Hundreds of cars carrying Sirte residents formed long lines at revolutionary forces’ checkpoints leading out of the city, calmly waiting to be checked by the fighters as explosions echoed in the distance.
After weeks of fighting Gadhafi’s loyalists inside Sirte, the fighters now hold positions about three miles (five kilometers) from the city center, said commander Mustafa al-Rubaie.
Last week, the Libyan Defense Ministry announced that Sirte’s port, airport and military base were all under their control.
Al-Rubaie told The Associated Press that fighters from the east seized control of Sirte’s first residential district and a hotel where Gadhafi’s snipers were based.
“There is heavy fighting going on in the streets of Sirte right now,” he said. “The enemy is besieged from the south, east and west but it’s still in possession of highly sophisticated weapons and a large amount of ammunition.”
Al-Rubaie said Gadhafi forces were also in control of strategic positions inside the city, including high-rise buildings where snipers are positioned, making the revolutionary forces’ advance slow and hard.
“The plan is that the eastern and western forces will meet in the middle of Sirte,” al-Rubaie said. “When we reach this point, we will celebrate the liberation of Sirte.”
Fighters on the western approaches to the city fired rockets and tank fire at loyalists’ positions, while NATO aircraft were heard circling overhead.
Gadhafi’s spokesman Moussa Ibrahim, meanwhile, denied reports that he had been captured, telling the Syrian-based TV station Al-Rai that he was traveling with 23 fighters in Sirte. There was no way to verify the identity of the man speaking in the audio recording, but it sounded like his voice and the TV station has become the mouthpiece for Gadhafi’s resistance.
Many of those fleeing Sirte said conditions in the city continue to deteriorate, with food in short supply and no water or electricity.
“We couldn’t leave our homes because of the shelling; we had to leave the city,” said Ahmed Hussein as his wife, mother-in-law and two children watched the fighters search their car.
Cars, buses and trucks loaded with families and heaped with household goods lined up at the first checkpoint about half a mile (kilometer) from the front lines. Volunteers gave the families food and water while fighters checked documents and cars.
A small contingent from the humanitarian group Doctors Without Borders attempted to enter Sirte on Saturday to deliver medical supplies but turned back because of heavy shelling and no guarantees that the Gadhafi loyalist would hold their fire.
In between the bouts of shooting, Libyan fighters prayed.
German officials on Monday downplayed prospects of any quick and dramatic change of course in the eurozone debt crisis, days before a parliamentary vote on beefing up the continent’s rescue fund.
Weekend meetings of global financial leaders in Washington raised hopes of a change in strategy, with officials indicating that would focus on further boosting the firepower of the euro440 billion ($595 billion) rescue fund _ perhaps by allowing it to tap loans from the European Central Bank or otherwise leveraging its lending capacity.
Hopes for such a move boosted European stock markets on Monday, with German and French bank shares rising strongly.
However, ahead of a parliamentary vote Thursday on changes to the fund that eurozone leaders already agreed to in July, Berlin was keen to underline its attachment to its often-criticized step-by-step approach.
Thursday’s vote on expanding the powers of the rescue fund, the so-called European Financial Stability Facility, will be followed over the coming months by final decisions on a second bailout package for Greece and on a permanent rescue mechanism meant to succeed the EFSF from 2013, Finance Ministry spokesman Martin Kotthaus noted.
“That is quite simply the procedure that lies in front of us _ we will work through it step by step,” Kotthaus said.
When asked in Washington whether he supported the idea of leveraging the rescue fund, German Finance Minister Wolfgang Schaeuble said: “Of course we will use the EFSF in the most efficient way possible.”
His spokesman, Kotthaus, said that the EFSF “is how it is” and noted that only a small part of the funding has already been committed.
Asked about the possibility of leveraging the fund, he said “the discussion is not so far along that I could contribute any examples, ideas or subideas.”
Some in Chancellor Angela Merkel’s center-right coalition already find beefing up the EFSF by giving it new powers hard to swallow, and anything beyond that could be a hard sell among its lawmakers.
Christian Lindner, the general secretary of the Free Democrats _ Merkel’s junior coalition partner _ called on the chancellor to provide clarity and stressed that his party opposes allowing the fund to tap ECB loans quick guaranteed personal loans.
A prominent opposition lawmaker, center-left Social Democrat Carsten Schneider, said the government should come clean on its “real intentions.”
“In Washington and Brussels they are already planning new programs in the billions, and in Germany the parliament and public are having the wool pulled over their eyes,” Schneider was quoted as telling Der Spiegel magazine.
Merkel’s spokesman rejected that accusation sharply.
“The true intentions of the government and the chancellor are on the table,” Steffen Seibert said. “They will be decided on in parliament Thursday.”
Merkel has been caught between criticism from abroad for doing too little and from supporters at home who fear she is spending too much taxpayer money on the crisis. She went on German television Sunday night to defend her step-by-step tackling of the crisis.
She warned of the dangers a radical restructuring of Greek debt might bring at this stage.
“Lehman Brothers was allowed to go bust, and then the world was surprised that it fell into a deep crisis,” Merkel said on ARD television.
“What we have to learn is that we can only take steps we can really control,” she added. “The word ‘haircut’ is easy to say on its own … (but) we must go step by step.”
In financial terms, a haircut is a loss investors take on an asset. Many experts believe Greece’s bondholders will have to take a sharp haircut _ that is, not get paid back fully for the money they lent to the country _ if Greece is to have any chance of reducing its debt load.
“What we cannot do is, along the way, destroy the confidence of all investors, and (have) them say, OK, they did this with Greece now; tomorrow they’ll do it with Spain, the day after with Belgium or some other country,” Merkel said.
“Then no one anywhere would invest their money in Europe any more, and we have to prevent that.”
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