This week the draft of a plan that would allow the German government to take control of ailing banks without taking the controversial step of nationalizing them leaked to the media here.

The plan, formulated by German Economics Minister Karl-Theodor zu Guttenberg, would allow the Federal Financial Supervisory Authority, also known as BaFin, to step in to help restructure and stabilize ailing banks in the form of compulsory state administration. Strict time limits would be placed on the term of administration and shareholders' rights would not be fundamentally affected, in order to prevent the moves from upsetting financial markets. Once stability is restored at a bank, the government agencies would step back.

The motivation behind the plan stems partially from the German government's €102 billion ($147 billion) bailout of mortgage bank Hypo Real Estate , which began last year. The life raft for HRE became the most expensive financial rescue in the country's history, and at the time Guttenberg -- a member of the Christian Socialist Union (CSU) -- and Finance Minister Peer Steinbrück bickered over what to do with shareholder's stock in HRE . Steinbrück, a member of the Social Democratic Party (SPD), argued that the shares should be expropriated, a price of the hefty government bailout. Guttenberg disagreed. In the end, the German government did buy out shareholders and prop up the bank out of fears that a collapse could have had a systemically negative effect on the financial system.

The 28-page draft of Guttenberg's plan has solicited a variety of reactions. Some say it would give the German government unprecedented powers over commercial banks, allowing it to fire top managers and restructure companies without shareholders' permission. Others believe the threat of state administration would discourage banks, many of which presently assume that the government will always be there to bail them out, from engaging in riskier activities.

One group that hasn't been at all pleased by Guttenberg's draft, which hasn't yet been reviewed by the government, is Germany's own Justice Ministry. Justice Minister Brigitte Zypries of the SPD is currently working on competing legislation to be released in the coming weeks.

Indeed, one thing everyone seems to agree on is that Guttenberg's draft won't be put on the legislative agenda until after the German general elections  on Sept. 27. At that stage, it could become a factor in negotiations around the forming of a new coalition government. If current Chancellor Angela Merkel -- whose Christian Democratic Union is the larger sister party to Guttenberg's Bavarian CSU -- is re-elected and forms a coalition with the business-friendly Free Democratic Party (FDP), Guttenberg's draft may well become legislation. If Merkel ends up in another coalition with the Social Democrats, then the economy minister will have a fight on his hands.

German editorialists on Friday seem split on Guttenberg's suggestions. While nearly all ask how, exactly, "compulsory state administration" would be implemented, left-leaning commentators feel the plan doesn't go far enough and business-minded analysts question whether the government really knows best.

The left-leaning Berliner Zeitung writes:

"Months before the banking crash in September, state overseers already knew about the difficult, potentially catastrophic situation at HRE. The business model there couldn't weather the storm of the crisis. Even the Finance Ministry and its head could -- indeed, must -- have been aware of what was going on. But our hands were tied, says Jochen Sanio of BaFin. The existing laws wouldn't allow for interference any earlier, the catastrophe had to play out."

"And this is what Guttenberg is getting at with his suggested legislation. Should any bank with a large influence on the financial system -- such as HRE -- look as though it is at risk, then the supervisory authorities should be able to step in and restructure the business accordingly."

"There's also some smart electioneering going on here -- the clever economics minister knows exactly how to push the buttons of his opponents, Steinbrück and the SPD."

Business daily Handelsblatt writes:

"Outside of political considerations, the minister's plan suffers from some straightforward issues of implementation. The near-bankruptcy of Hypo Real Estate exposed deficiencies in the workings of the Financial Supervisory Authority (BaFin) -- so much so that there is a parliamentary committee of enquiry  looking into the bank's €100 billion-plus rescue."

"There's the question of how German financial overseers are to recognize whether a bank can make it through a crisis under its own steam or whether state assistance is required. In this proposed legislation, the circumstances under which the state can step in are very subjective."

"Another bottleneck involves the BaFin itself. It is hard to imagine how this agency, with its current staffing levels, could control -- and adapt -- restructuring plans on the spot. Without reforming BaFin, the economic minister's plans are worthless."

The center-left Süddeutsche Zeitung writes:

"Guttenberg's idea has two weaknesses. First, he has come to this issue fairly late in the game -- so one could get the idea that this is more about election campaigning than anything else. For another thing, his ideas on state compulsory administration don't go far enough. Guttenberg wants to leave the rescue plans in the hands of the banks' existing management. But in doing this, he is making the people who got the bank into a mess in the first place into the bank's rescuers."