Germany is very much a part of the neighborhood going south (so to speak) in that they were at the very least enabling all the loose lending, if not actively complicit in fostering such an environment (e.g. why weren't they vetting their loans better).
They were either fully aware or extremely incompetent, and the latter isn't plausible.
Aside: I believe that the German banks have to live with their mistakes regarding due diligence, although even that isn't so clear as it seems that the greek authorities weren't entirely honest when it came to their financials.
Why not? I can and do blame banks for lending money to people who they know are submerged in debt. That does NOT mean those people aren't to blame too. Blame can be attributed to more than one party.
http://www.pbs.org/newshour/bb/business/july-dec11/makingsen...
"The Germans made just about every bad investment you could have made in the last 10 years. They invested in Icelandic banks. They invested in Greek government bonds. They were heavy into Irish banks, big into Irish banks, and they bought U.S. subprime mortgage bonds."
I want numbers, not stories.
http://www.haver.com/comment/comment.html?c=120604b.html
[NB Germany doesn't have the largest exposure to Spanish banks - US banks do]
In Portugal its the US banks, too. In Ireland its the UK banks. In Greece its the French and US banks.
That the German banks were largely responsible now is falsified with the numbers you linked to.
However, I can't provide direct quantitative information on the quality of the loans summarised by those numbers. Lewis (who seems credible to me) gives accounts of how German banks appear basically to have been taken advantage of (hence the "stupid money" comment) as customers for particularly ill-advised investments.
That part of the story is correct, IMHO. There are a lot of stories around it.