Spain Follows Iceland and Arrests Top Bankers*
By Ariana Marisol
Spain is following in Iceland’s footsteps by charging their top bankers for failings that led to the loss of millions of Euros for smaller investors.
Last year, Iceland jailed nine of its top bankers for a total of 46 years for crimes relating to the 2008 economic crash.
Last year, Spain’s Supreme Court ruled that there were “serious inaccuracies” in the listing that led investors to back certain banks. Because of this, the bank has had to pay out millions of Euros in compensation.
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.”
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 porfolio of bad mortgage loans forced the government to seize control of it. There is evidence the regulators had “full and thorough knowledge” of Bankia’s plight. After its nationalization, it reported a €19.2bn ($24.7bn) loss for 2012, the largest in Spanish corporate history.
Internal emails and documents played a huge role in bringing down the central banking officials to task for the failure of Bankia. Inspectors who brought issues to the attention of superiors were allegedly ignored.
While Spanish judges are generally reluctant to sentence first-time financial criminals to prison, actions are being taken against the wrongdoings and wrongdoers of Bankia.
Meanwhile, taxpayers in the United States have yet to see Big Bankers criminally responsible for the financial ruin of millions of citizens brought to any semblance of justice.