[JURIST] German Chancellor Angela Merkel [official website, in German] announced [press release, in German] Wednesday that her cabinet had agreed on a draft bill [PDF text, in German] that would allow the government to forcibly nationalize some ailing financial institutions. The bill apparently targets Hypo Real Estate (HRE) [corporate website], a holding company that, despite receiving over 87 billion euros in bailout money, has not recovered. Merkel said [interview transcript, in German] Monday that the country faces a "crisis that is extraordinary" and that implementing the nationalization measure would be a "last resort." It is likely that a decision to enforce the bill, which would expropriate obstructionist shareholders, would be challenged in Germany's Constitutional Court [official website].

The bill is especially controversial because of Germany's Nazi and Communist heritage. The British government moved in the direction of nationalizing several UK banks [Telegraph report] last October. The continuing financial crisis has shifted global focus to new overall regulatory schemes beyond combating mortgage and investment fraud [JURIST reports] in the US.