German economists warn on summit decisions

BERLIN — A group of German economists is denouncing decisions made by last week’s European Union summit, arguing that taxpayers, retirees and savers shouldn’t be liable for the debts of struggling banks.

EU leaders agreed European bailout funds could in future pump money directly into banks, rather than via governments, once an effective supervisor is established.

Dozens of economists — including Hans-Werner Sinn, the head of the prominent Ifo think-tank and a vocal critic of leaders’ rescue policies — wrote in an open letter published by the daily Frankfurter Allgemeine Zeitung Thursday: “We view the step toward a banking union, which means collective liability for the debts of the banks of the eurosystem, with great concern.”

They said the decisions Chancellor Angela Merkel “saw herself forced to take were wrong.”