Why Has Germany Bailed Out A Tiny Bank?

The first German bank has died from Austrian contagion.  Duesseldorfer Hypothekenbank AG (“Duesselhyp”), a tiny mortgage lender, has been seized by the Bundesverband Deutsche Banken (BDB), Germany's association of private banks. According to Reuters, The BDB had hammered out a deal over the weekend with financial market watchdog Bafin, the Bundesbank and resolution authority FMSA to provide a guarantee for DuesselHyp's holdings of around 350 million euros ($370 million) in Heta bonds that a...