Merkel ally lashes out at Draghi over ECB plans to buy 'junk' paper
By Erik Kirschbaum
BERLIN (Reuters) - An ally of Chancellor Angela Merkel criticised the European Central Bank and its president Mario Draghi in a rare public attack, telling Bild newspaper the ECB's new schemes to bolster lending and buy asset-backed securities would scare Germans.
"It's only going to frighten a lot of people when ECB chief Mario Draghi opens up the central bank's money tap and at the same time buys junk paper," Christian Social Union chairman and Bavaria state premier Horst Seehofer said in an interview with Germany's top-selling newspaper, to be published on Monday.
Political leaders in Germany almost never publicly question or criticise the independent Bundesbank, Germany's central bank, or the European Central Bank, although government officials have expressed doubts about the ECB's moves privately.
The ECB cut interest rates to near zero on Thursday and pledged to buy asset-backed securities in addition to its plan to offer new four-year loans to stabilise inflation expectations and pump money into the flagging euro zone economy.
In September and December, it will offer banks four-year loans to encourage them to lend to companies and others, which is likely to generate hundreds of billions of euros of fresh credit.
A separate project to buy asset-backed securities, including repackaged property debt including covered bonds, could put a further 500 billion euros into the financial system, freeing up banks to lend more.
Seehofer, known for his populist statements at times, spoke about the rise of the eurosceptic Alternative for Germany (AfD) party, which won a surprise 9.7 percent in a recent regional election.
Staunchly opposed to the euro zone bailouts that Merkel has helped to engineer, the AfD has tapped a vein of discontent with career politicians and bureaucrats, carving out a niche to the right of the mainstream parties.
"It is our job to criticise these debt-making policies - our country doesn't need an AfD for that," said Seehofer.
"The majority in the AfD are not a bunch of far-right nimrods but rather there are a lot of intelligent people there skilfully playing on the public's fears," said Seehofer.
(Editing by Hugh Lawson)
