Spain Sets Massive Precedent — Charges Its Central Bankers in Court

2 months ago
69 in news

First, Iceland, and now Spain has taken on the Big Bankers responsible for financial calamity, as the country’s highest national court charged the former head of Spain’s central bank, a market regulator, and five other banking officials over a failed bank leading to the loss of millions of euros for smaller investors.

This, of course, markedly departs from the mammoth taxpayer giveaway — commonly referred to as the bailout — approved by the U.S. government ostensively to “save” the Big Banks and, albeit unstated, allow the enormous institutions to continue bilking customers without the slightest fear of penalty.

Errant bankers and financiers, it would seem, typically manage to either evade actually being charged, or escape hefty fines and time behind bars.

Spain’s Supreme Court last year ruled “serious inaccuracies” in information about the listing led investors to back Bankia in error, thus the bank has since paid out millions of euros in compensation.

But Spanish authorities could not abide the telling findings of a yearslong investigation into the failed listing, as Wolf Street explains,

“As part of the epic, multi-year criminal investigation into the doomed IPO of Spain’s frankenbank Bankia – which had been assembled from the festering corpses of seven already defunct saving banks – Spain’s national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel Ángel Fernández Ordóñez, and its former deputy governor (and current head of the Bank of International Settlements’ Financial Stability Institute), Fernando Restoy. It also summoned for questioning Julio Segura, the former president of Spain’s financial markets regulator, the CNMV [National Securities Market Commission] (the Spanish equivalent of the SEC in the US).

“The six central bankers and one financial regulator stand accused of authorizing the public launch of Bankia in 2011 despite repeated warnings from the Bank of Spain’s own team of inspectors that the banking group was ‘unviable.’”

As AFP reports, “The National Court validated conclusions made by prosecutors who concluded that when ‘an unviable entity has been listed on the stock market, its administrators or auditor should not shoulder all the responsibility.’”

Specifics of the charges have not yet been made apparent, but as The Economist reports:

“The court is questioning why they allowed Bankia to sell shares in an initial public offering in 2011, less than a year before Bankia’s portfolio of bad mortgage loans forced the government to seize control of it. It said there was evidence the regulators had ‘full and thorough knowledge’ of Bankia’s plight. After its nationalisation, it went on to report a €19.2bn ($24.7bn) loss for 2012, the largest in Spanish corporate history.”

Internal emails and documents played a crucial role in ultimately bringing the central banking officials to task for the failure of Bankia — inspectors bringing issues to the attention of superiors were allegedly ignored. One email cited by the Economist came from an inspector who warned Bankia was “a money-losing machine,” for which an IPO would not solve.

Another report, deemed “devastating by the court,” saw an inspector advise Bankia to seek a private buyer rather than proceed with the listing.

An inquiry into “the participation of other players, such as officials in the central bank,” was also urged by the National Court.

As the Economist points out, Spanish judges are generally reluctant to sentence first-time financial criminals to prison; though five Novacaixagalicia executives had five-year suspended sentences — levied for embezzlement in 2015 — abruptly enforced in January.

Meanwhile, taxpayers in the United States have yet to see Big Bankers criminally responsible for the financial ruin of so many Americans brought to any semblance of justice for their wrongdoing.

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71
  ·  2 months ago

“I believe that banking institutions are more dangerous to our liberties than standing armies,” Jefferson wrote

57
  ·  2 months ago

As you so accurately state:
Meanwhile, taxpayers in the United States have yet to see Big Bankers criminally responsible for the financial ruin of so many Americans brought to any semblance of justice for their wrongdoing.
I am not sure it will ever happen either.

66
  ·  2 months ago

Thank you @ tftproject for this news.good work.upvote.greets

68
  ·  2 months ago

Downvoted in disagreement with rewards generated by concentrated whale voting

62
  ·  2 months ago

and why all this happening and will keep happening
because my dear ladies and gentlemen of human greed

o yes human greed

btw thanks for the post! (followed)

67
  ·  2 months ago

I love how you thoroughly go through the story of this whole mess and end up underlining the blatant truth screaming to the world about the USA's bankers. as I remembered the Icelandic move, I was already dreaming of the day the world would bring into justice the upper instances of the world's banking elite. The world needs to see justice.

Thanks for sharing this story with us all. All for one and one for all! Namaste :)

59
  ·  2 months ago

interesting article

52
  ·  2 months ago

great

66
  ·  2 months ago

In 2009 I remember a woman British journalist working for the financial times was on the Jeremy Paxman show. Said that the bankers involved should be charged with crimes against humanity in a trial similar to that of the Nurenberg Trials at the end of WW2.
Paxman was shocked, I totally agreed.
And the thing is the only reason why this did not happen is because we have created a society where financial white collar crime is not seen as serious as a common house thief. And this is simply due to that fact that we have had generation were the majority of the population do not understand how finance works. Bitcoin s changing that. When you get involved in Crytpo currency you soon begin to learn about finance.
The days of the banksters if numbered.