As Americans’ eyes last week were trained upon the vice presidential debates, the O.J. Simpson verdicts, and, of course, the $700 billion bailout that found new legislative life after a tweak here and a sweetener there, the European Union was assessing its own brewing financial crisis. Germany has intervened to save the country’s second-largest mortgage provider:

“The German Finance Ministry says government officials and private banks have agreed to a new 50 billion euro (US$69 billion) deal to bail out Hypo Real Estate AG.


A ministry statement says the deal will add up to 15 billion euros ($21 billion) in credit to an earlier plan worth 35 billion euros ($48 billion).


Under the original plan, the German government would have injected 27 billion euros ($37 billion) into the country’s No. 2 commercial property lender and banks would have provided the rest.


That deal fell apart Saturday.


German lawmakers and bankers spent Sunday devising a more aggressive solution.”

The Herald (Scotland) notes that just on Saturday, Chancellor Angela Merkel was backing away from French President Nicolas Sarkozy’s suggestion of a multi-billion EU-wide bailout, opining it was better for banks to find a way out on their own:

“Less than 24 hours later Ms Merkel was back in Berlin surveying the wreckage of her six-day-old, 35bn (£27bn) intervention to collaborate with a consortium of German banks to save the country’s second-biggest mortgage provider, Hypo Real Estate.


Having looked more closely at the stricken financial group’s accounts, the banks decided its mounting liabilities were too great to save it.


The German Chancellor decided that, whether Hypo could be saved or not, her government had to act to ensure no citizen had fears for the safety of their investments.”

The Independent asks “the £2trillion question” — should Gordon Brown follow suit and guarantee all savings in British accounts?

Bloomberg reports that the EU version of the financial crisis has sent the euro to a 13-month low against the dollar.

(Photo by Johannes Simon/Getty Images)