European integration and the landesbanks -- The government in the German banking system -- Germany's special path -- The powerful landesbanks -- The savings banks -- the base of the landesbanks -- The federal banks -- The competitive advantages of the public banks -- Institutional guarantee, liability guarantee and risk consolidation -- Risk financing, rating advantages and refinancing costs -- Inadequate rates of return on equity capital -- High profit retention rates -- Overreaction to the new EC Directives -- The appeal made by the Federal Association of German Banks -- Is government intervention in the banking sector justified? -- irrelevant arguments -- The invisible hand and the public hand -- The public functions and real aims of the landesbanks -- Can the market provide full coverage of banking services? -- Do the savings banks encourage savings? -- The pike in the goldfish pond -- Economies of scale and government intervention -- Should the government insure banks? -- Nothing ventured, nothing gained: risk financing in Germany and the USA -- The argument for having a public banking system -- A wrong counter argument -- Government deposit insurance, moral hazard and bank failures -- Why distortion of competition is a problem -- A plea for the reform of the capital market -- The history of banking in Germany -- The real aims of the landesbanks as revealed in press articles and the annual reports of the banks -- The increase in the balance sheet totals of the landesbanks and the Westdeutsche Immobilienbank.