The German finance minister is furious over how €55 billion were wrongly added to public overspending, and is demanding answers from top officials at a critical time for Germany's public finances on the international stage.
Finance Minister Wolfgang Schaeuble is expected to grill the head of the nationalised mortgage lender Hypo Real Estate, Manuela Better, and the head of FMS Wertmanagement which manages HRE's problem assets, Christian Bluhm, later on Monday.
And he has also called a meeting with HRE and FMS officials, plus auditors PWC and the financial market stabilisation agency FMSA on Wednesday.
"A mistake like this involving such a sum of money makes us very angry, to put it politely," said ministry spokesman, Martin Kotthaus, warning "consequences may have be to drawn".
The mistake apparently arose because changes in the value of collateral held for derivatives were not fully taken into account.
The error reportedly came to light in early October and in its half-year accounts, FMS was compelled to correct its balance sheet for 2010 to lower debt by 24.5 billion euros and will reduce the borrowing figure for 2011 by 31 billion euros.
Because FMS is ultimately owned and guaranteed by the German government, this means the country's overall debt burden is expected to amount to 81.1 percent of gross domestic product (GDP) this year instead of a previous estimate of 83.7 percent.
IHS Global Insight analyst Timo Klein said such a massive error will inevitably tarnish the ultra-correct reputation of Germany and its finance minister Schaeuble.
"Against the background of the growing commitments of Germany to the European rescue fund, one could welcome this significant reduction of the German debt level," said Natixis analyst Christian Ott.
"However, the magnitude as well as the reasons for this incredible mistake casts serious doubt on the quality of the 'bad bank's' management," he said.
Opposition parties were quick to pounce on the incident, with the parliamentary spokesman for the Social Democrats, Thomas Oppermann saying: "This isn't the kind of sum that a housewife stashes away in a biscuit tin and forgets."
Schaeuble had let himself be distracted by efforts to save the ailing euro, Oppermann said.
Nevertheless, analyst Klein insisted the state of Germany's public finances was not in doubt, as had been the case with Greece.
"It's an error. The figures haven't been manipulated," he said.
The finance ministry argued it was not its task to draw up and audit a company's accounts.
Nevertheless, in the case of HRE, the ministry is directly involved, because the mortgage lender was nationalised in 2009 to save it from bankruptcy.
The rescue has already cost the state €10 billion and the losses are unlikely to stop there.
On June 30, HRE's 'bad bank' FMS Wertmanagement said it held Greek government bonds with a nominal value of €7.2 billion, plus a further 1.6 billion euros in loans and bonds of Greek issuers.
And it took a charge of 808 million euros on those holdings in the first half of this year, pushing it into net loss of 690 million euros.
FMS's losses are underwritten by the German state, but since it already booked a loss of 3.0 billion euros last year, the €3.9 billion of state money pumped into it last year have practically already been used up.
Thus, if further losses are incurred in the coming months, the state will have to put up more money.