by Calculated Risk on 10/05/2008 06:04:00 PM

From Bloomberg: Hypo Real Estate Gets 50 Billion-Euro Government-Led Bailout (hat tip Sam)

The German government and the country's banks and insurers agreed on a 50 billion euro ($68 billion) rescue package for commercial property lender Hypo Real Estate Holding AG ...

The NY Times explained part of the problem at Hypo:

Depfa, a Dublin-based lender that Hypo acquired last year, is at the center of its problems. Depfa underwrote a package of municipal bonds which were subsequently downgraded by ratings agencies. That step obliged Depfa to buy the bonds back ...

So Hypo needs much of the €50 billion to buy back the muni bonds, and despite the downgrades, these munis are probably still worth somewhat close to €50 billion (not like the disastrous losses for some of the MBS that is hitting US and other European banks). So this sounds more like a liquidity issue rather than a solvency problem.