The investigation into public bank BayernLB highlights the problems the German justice system faces in tackling the shortcomings that led to the financial crisis. Investigators are overwhelmed, and managers and supervisors have formed a wall of silence.

It was shortly after 8.30 a.m. last Wednesday when the employees of Bayerische Landesbank (BayernLB), a publicly-owned German regional bank, received an unexpected visit. Many had just poured their first cup of coffee when about 50 police officers and prosecutors marched into the bank's legal department, where they presented a search warrant issued by the Munich district court. Then they proceeded to the executive suite on the sixth floor, where CEO Michael Kemmer has his office.

At the same time, authorities were searching offices and private residences in Austria, Luxembourg and at Ammersee Lake near Munich, where Kemmer's predecessor Werner Schmidt has been living since he was forced to resign.

The investigators accuse the former CEO of having paid more than 300 million euros ($447 million) too much for the Austrian banking group Hypo Group Alpe Adria (HGAA), which BayernLB acquired in the summer of 2007. Complete nonsense, says Schmidt, who argues that all relevant boards had approved the deal, and that there was nothing wrong with it. "I can only recommend," says Schmidt, "examining all of the relevant executive board and supervisory board records."