KfW Bankengruppe was given the title "Germany's dumbest bank" by the German media last week after it first surfaced that it had lost $426 million (€300 million). The loss was incurred as it transferred money to Lehman on a routine currency swap. At the same time all its rivals in Europe were trying to take their money out of Lehman. The computers at KfW made a routine transaction that had been prescheduled. Unfortunately Lehman would collapse a little more than an hour later. It never made the return payment on the swap and Kfw was out $426 million.

The firm besides now having an unflattering moniker linked to its name is now also facing heavy government scrutiny, the firm is government owned. The losses will directly be felt by the taxpayers and people are for obvious reason less than happy.

Two of the board members, Detlef Leinberger and Peter Fleischer, were suspended with pay pending an investigation. The bank is currently investigating if it can sue its executives for their mismanagement.

What makes the mistake more unbelievable is that the firm had met up on the weekend prior to last Monday's transaction to specifically talk about their exposure to Lehman. Now we know that they did transfer a lot of assets they had with Lehman out which lowered their exposure to the downfall. Which just makes you wonder why was the transaction not cancelled.

Last week German finance minster Peer SteinBrück expressed his disbelief in the matter and stated that there has to be consequences for what had happened. This came after the finance minister and other German officials kept repeating that German financial institutions are immune to the crisis.

KfW was founded in 1948 to help with the reconstruction of Germany after the war. It is responsible for making loans to small and medium size business to help investments in under developed sectors of the economy. Its objective never included swap deals with foreign investment banks.

It is not KfW's first loss in the financial crisis it lost money on its sale of IKB. IKB needed rescuing over and over again after it sustained heavy losses made from speculating in mortgaged-backed securities. KfW started with a minority share in the company but, after a numerous bailouts of the company ended up being 91 percent shareholder of the company when it sold it to an American private equity group.