Oooh! Yes please, let’s have local, politically connected banks!
YOU’VE heard the calls. It’s mad to have only a handful of banks that are too big to fail. We should have local and regional banks And put localy politicians, union leaders, on their boards as well. To make sure that the needs of society are catered to, not just shareholders.
Well, yes, that’s as maybe, But then let’s go and have a look at the end results of that sort of system:
Nationalised Spanish lender Bankia is expected to reveal a €19bn loss next week, the largest in the country’s corporate history.
That’s a pretty big loss really. But obviously this is just another big bank that got into trouble and had to be nationalised, right?
No, not quite actually. Bankia is a merger of a number of small local banks in fact, those called “cajas”. Cajas were not for profit (usually, any profits were spent on local charities). And they used to have local unions leaders and politicians on the boards. To make sure that those wider interests were all thought about.
Oh, and they all went bust. All went bust as a result of simply lending too much money to hte wrong people.
In fact, the only Spanish banks that are still standing are the three large ones. The three that are run for profits for the shareholders. The three that don’t have politicians on the board and don’t have union leaders helping.
I’m sure there’s a lesson in there somwhere. Perhaps it might be that Bob Diamond ain’t the world’s greatest banker but that Bob Crow could be worse?
Photo: Christie’s employee Eryn Brobyn adjusts artwork from the Lehman Brothers sale during a photo call at Christie’s in west London, before it goes under the hammer on September 29. It once adorned the walls and offices, of the British and European arms of the former banking powerhouse before being declared bankrupt in 2008.
Posted: 28th, February 2013 | In: Money Comment (1) | TrackBack | Permalink
