We don’t need a bailout. Of course, if you believe Prime Minister Mariano Rajoy who tried to reassure the battering markets on Monday, Spain will be able to handle all its own finances.
I believe him. If the government can come up with a €23-billion rescue for Bankia it can surely come up with money to keep this country afloat.
Bankia has been the Spanish government’s biggest nightmare; the rescue is the largest in Spanish history. There is concern about what a financial institution that gets a lot of government money will do with it. We can only hope that these bank managers won’t give themselves a nice payoff. This is what happened with the infamous María Dolores Amorós, the former general director of Caja de Ahorros del Mediterraneo (CAM), who got a generous payout from the bank when she left. Now she is seeking an additional €10 million in compensation for being dismissed from the failed lender.
Government bank bailouts may be necessary but they should be monitored with close care. We don’t need any new manager to give themselves a hefty raise or a nice fat benefits check, especially when Bankia says it needs €23 billion to shore up the troubled lender.
What got Bankia into this mess – besides the usual losses from the property market – is beyond belief. As Daragh Quinn, a banking analyst at Nomura in London, told The New York Times: it was a GUBU – grotesque, unbelievable, bizarre and unprecedented. How far can the Rajoy government go without extending itself? Probably not too far.
Bank managers who are involved in a bailout should be held to answer many questions. They should be ordered to face Parliament where they can be grilled and told how they can use our money. Rajoy doesn’t want to look for culprits. He has ruled out ordering Bankia managers to appear before lawmakers, at least for now. Nor will he open an investigation. Nevertheless, the Attorney General’s Office has said that it was looking into several lenders – Bankia not included – to determine if there was any funny business.
We have not seen the last of this banking scandal. It is only a matter of time until we are forced to deal with the reality that our government will have to step in and rescue another capsized financial institution.
When elephants rule
The Florida press was abuzz – or maybe even embarrassed – last week by state Governor Rick Scott’s recent visit with King Juan Carlos. In a video of his meeting with the monarch, the governor, looking much like an eager and curious boy (see the picture right), tells the king right off while extending his hand that he never shot an elephant but had certainly ridden one. Visibly taken aback and looking uncomfortable, the king just responded with a quiet “oh?” Later in the video, Scott continues his prying by asking the king how he broke his hip. “I was getting out of bed,” the king again responds quietly in English. Then the governor makes his final gaffe by telling King Juan Carlos that he needed a better story than that to explain how he broke his hip. The king’s highly controversial elephant hunt in Botswana, where he broke his hip, last month had been pretty much forgotten in the press until Scott arrived. Now the governor wants the king and Queen Sofía to come to Florida next year to help celebrate the 500th anniversary of Juan Ponce de León’s arrival.
By Martin Delfin, Martin writes for the English language version of El Pais