As far as Germany is concerned, our main weakness lay in banks with inappropriate business models. In their search for profitability and in order to save capital, they established what are known as structured investment vehicles. It gives no comfort that many banks in other countries did the same. These SIVs were short-term funded.
And they invested heavily in financial products which their management probably did not fully understand. In particular, they failed to capture the risk profile of their investments and underestimated their exposure to systemic events. In the second stage of the crisis, we were faced with the threat of a renewed Great Depression.