During the crisis, some Spanish banks were joined together and put into the market as “Bankia”, which turned out – surprise! – to be a “bad” bank: lots of non-performing loans, investors lost a lot of money. Now the criminal investigations have started and some people belonging to the leadership of the Spanish central bank, Banco de España, have been indicted, according to the NY Times from Monday:
The case could be the first instance in which the apex of Spain’s financial regulatory system is held directly accountable for its failure to prevent the Bankia scandal, in particular the initial public offering, in which shareholders were wiped out.
This again opens up the discussion of EU banking rules, after the “bail-in” basically failed on its first test some two months ago when Italy decided to bail-out Banco Monte dei Pasci di Siena. Apparently, the rules did not work before the crisis and thus were changed during the crisis. However, it seems now that the new rules don’t work either. The European Union seems to be unable to deal with its financial and economic crises, and this is dangerous for the integrity of the European project.
According to the Eurobarometer 86 (link), the biggest issues the member states face are unemployment, immigration and the economic situation in general. If the EU cannot get its act together in these areas we will see further dissolution of the project, however well-meant it is. The banking troubles are the cause of the economic troubles of the eurozone, made worse by austerity policies, enforced rules that don’t work (“bail-in”) and non-enforced rules that would (macroeconomic imbalances procedure). For all the talk in Germany about the importance “Ordnungspolitik” (basically institutions framing the way that markets work), the situation in Europe in 2017 is worse than ever before. It seems that nothing has been learned from the crisis yet.