The big news in Spain today is that José Manuel Durao
Barroso, president of the European Commission, will suggest to use the
European bailout fund to help banks directly, not just States. There are
big headlines
about it with Bankia in mind. However, this is not new. It has been a
long standing position of the Commision, which has not the last word on
this (the Eurozone Goverments do).
In July 2010, two months after the birth of the bailout fund, Olli Rehn, the commissioner in charge of Economic and Monetary Affairs,
said this money (then 750 billion euros) should be used for banks if
needed. He said it first at an off the record briefing. Scared by German
reaction, his staff tried to deny it, but then the commissioner said it again, this time on the record.
We weren't talking about Spanish banks then. They were among the best according to the EU banking stress tests. Still in denial, Rehn said, "I don’t believe this will have to be used...The European banking
sector is strong overall".
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