Germany's president Horst Koehler said that the crisis in the world financial markets came close to bringing about a general economic collapse. He called the markets a monster that needs to be put in check.
Koehler wants to hear some "mea culpas"
Germany's president has watched the recent global credit crisis which rocked the banking industry with a special amount of concern. Koehler has first-hand experience in the banking industry as the former head of the International Monetary Fund (IMF).
"We came close to a collapse of the world financial markets," Koehler said of the crisis that has played out in recent months in an interview with the weekly Stern magazine.
Koehler called for banks to admit the errors they made.
"The markets have developed into a monster that has to be tamed," he said, adding that this must be obvious to anyone in the financial industry who thinks responsibly.
Too little equity
Bankers have invented so many financial derivatives that they no longer understood themselves what effects these had, Koehler said.
"The excessive complexity of financial products and the opportunities to set up enormous leveraged deals with the tiniest amount of equity have caused the monster to grow," said Koehler. "It hardly has any relationship any more to the real economy."
On top of that "some financial managers are receiving bizarrely excessive remuneration," he said. The financial industry had made a fool of itself but he had yet to hear "a clearly audible mea culpa" as an admission of error.