October 27, 2020

PNV and ERC point out that there was a lack of supervision during the financial crisis

PNV and ERC point out that there was a lack of supervision during the financial crisis



PNV and ERC have agreed that there was a lack of supervision by the Bank of Spain (BdE) and other regulatory bodies to tackle the housing bubble and the financial crisis and while Basque nationalists point to the "bad" action of the BdE, the pro-independence activists ask for judgments for some parties.

The political parties that make up the Congressional Commission that investigates the financial crisis and the bank rescue have remitted their conclusions today so that within a week they are analyzed by all and on November 30 there will be a common proposal and particular votes in what there is no agreement, so that it is debated in the plenary session of the Congress.

According to the PNV document, in the years of the housing bubble, the Bank of Spain did not fulfill its mandate and went from having a good to a "bad" reputation because it allowed the excessive growth of mortgage credit and did not prevent excessive valuations nor the increase in the price of housing.

"The Bank of Spain instead of solving the problems of the banking system, looked away and therefore helped to hide them," says the report that recalls that he knew the problems through the inspectors of this body.

It also indicates that the CNMV did not protect some investors who were buying toxic products and allowed the placement of preferred shares and subordinated obligations without complying with the rules of conduct that regulate their commercialization.

He has considered that the role of the Bank of Spain in the IPO of Bankia and the resolution of Banco Popular "has been questioned."

The PNV believes that the supervision must be completed with external audits, consultancy work or stress tests but they should not be substitutes for the first one.

It also refers to a "regulatory tsunami" that involves a constant effort to adapt regulation to the situation of the sector.

On the resolution of the Popular Bank points to the imperfection of the scheme with which it was carried out and that only serves to solve solvency problems and not specific needs of liquidity.

Regarding the rescue to Bankia describes as outrageous compensation and irregular remuneration in the entity, "already in trouble and under public governance schemes."

The PNV urges to give independence to the supervisory schemes, both in their role as regulators and in the supervision of audits and to make more robust the regulation applicable to accounting, auditors of accounts and supervisors of the profession.

It calls for the creation of national financial consumer protection authorities, the prohibition of the marketing of products to retailers in certain difficult situations, and the clarification of the types of investors and the creation of a macro prudential authority responsible for monitoring systemic risk.

ERC requests that those appearing that did not stop the crisis be brought to trial since there were no effective controls in those years of credit growth or on the strategic priorities of expansion of some entities. Neither about asset valuations or about eviction policies.

The text of ERC says that "it is necessary, as was done in the Bankia case, to identify the retailers affected in the resolution of the Popular, separate them from shareholders and institutional investors or large companies, assess the situation of each of them , and indemnify them.

Recommends financial information on a quarterly basis and with an obligation to be reviewed independently, financial audits that require more personalized and detailed reports.

A more effective and coordinated supervision with the ECB and independence in the control figures and financial sector authorities.

Also, discourage irregular marketing to retailers and macroprudential supervision that anticipates difficulties as well as training plans in the field of financial education and public banking.

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