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The Congress calls for a radical reform of the financial supervisors to prevent another crisis

The Congress of Deputies has approved Thursday the report on the investigation of the financial crisis, the bank bailout and the bankruptcy of the savings banks

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The Congress calls for a radical reform of the financial supervisors to prevent another crisis

The Congress of Deputies has approved Thursday the report on the investigation of the financial crisis, the bank bailout and the bankruptcy of the savings banks. A document, which after a year and a half of work has been endorsed by all the parliamentary groups with the exception of United we Can and Citizens. The first has refrained because he wanted the text would have been more severe, and Albert Rivera, who has voted against, by their discrepancies in relation to the politicization to which the responsible of the fall of the savings banks.

The groups parliamentary considered that the Bank of Spain and the other supervisory agencies "did not meet their obligations" to act against the housing and credit bubble. Also blame the managers. In particular, in the case of Bankia, they say they performed "practices accredited as a criminal in the system of remuneration of their leaders", and that these were the product of, among other things, "governance of highly defective" in the entity.

The conclusions of the parliamentary Commission have acquired a special relevance after it has been known that the Bank of Spain gives by lost, of time, more than 42,000 million of the taxpayers, a bill that has raised the public debt. Among the conclusions and proposals of the opinion highlights that make reference to the in-depth reform of the supervisory bodies.

Thus, it is proposed that the Government "take measures to ensure the effectiveness and independence of supervisors, capital adequacy, market, accounting and auditing and resolution, ensuring that no conflict of interest in the exercise of its functions and matches of members in their governing bodies".

effective Supervision and transparent

in Addition, we request that the Executive "that can start a process of formalization of procedures to be followed by supervisors to ensure effectiveness and transparency, without being necessary a new commission of inquiry to understand the role of each one of them." The parties agree that the model of existing monitoring entities (credit institutions and banking products (Bank of Spain); securities markets and investment services (CNMV); and insurance companies and pension funds (Directorate-General of Insurance and Pension Funds), "generates a lot of inefficiencies, conflicts and arbitration, regulatory, as the main actors in the market are entities operating simultaneously in the three sub-sectors".

To minimize or eliminate these problems, it is proposed to advocate for "the model of supervision functional, known as the twin peaks, which have already adopted some of the countries of our environment. This model articulates the monitoring around two institutions, a supervising agency of the creditworthiness of all financial institutions and other responsible for the supervision of standards of conduct". This model claimed Fernando Restoy in 2016, and was picked up in the program of the PP. However, led to a radical critique of the Ministry of Economy, led, then, by Luis de Guindos.

Authority of the protection for the client


The inspectors of the Bank of Spain asked the Congress to ensure its independence, The deputies, outraged by the veto of the ECB to declare an inspector a key in the downfall of the Popular inspector of the Bank of Spain that detected adjustments outstanding at the Popular appear in the Congress

The parties have agreed to ask for the "creation of a protection authority of the client financial. There is a legal commitment to constitute an authority for the extrajudicial resolution of disputes in the financial field, encompassing and refining the tasks that are currently undertaken by the claims services of the Banco de España, the CNMV and the Directorate-General of Insurance and Pension Funds. To improve the protection of customers financial, retailers in particular, is one of the main challenges ahead", concluded.

The Commission is also low in some detail and asks that the directors of the three agencies supervisors do not overlap in the various tips to avoid conflicts of interest. It also requests that the Board Only Resolution (JUR) european, inject liquidity before intervening a bank, something that did not happen in the case of the Popular.

In another matter, less legal, is considered to be "essential to improve the image and reputation of the sector, very affected as a result of the crisis. The survival of any sector depends on that society wants to exist, you will understand that it is useful. And the society is very disappointed, thinking that the crisis we have lived through, and that has led to the decrease in the level of life of many people, is due to the behavior of the bankers”.

Also considered "essential to rebuild the relationship of trust with customers, by putting them always at the centre of all decisions, by making a continuous effort to improve the transparency and to make products more simple, but also in promoting financial education, which allows people to make more informed decisions, and providing tools and practical recommendations custom".

In this morning's session, the Commission approved the report which is an account of the research carried out by the Congress, with quotes and data from documents provided by each of the groups.

Look to the other side

in Addition to this report, the commission Winxbet has approved a block of history, with a relationship of the documentation requested by the commission and the relationship of the parties requested, both those that eventually came to give explanations, as those that did not.

the report concludes that during the crisis, the supervisor, both under the control of Jaime Caruana (2000-2006) as Miguel Fernández Ordóñez (2006-2012), looked to the other side, some of what they have always accused the inspectors. "There were tools available" to act on the part of the Bank of Spain, but that these tools "were not used due to lack of political will" and charge against the supervisor in your management on the preferred because he believes that "led" their sales despite having "evidence on the aversion to these products by institutional investors."

in Addition to supervisors and financial sector, the report also points to the governments of Felipe González and José María Aznar for the approval of different laws. The president of the PP will blame the Law of the Land, which "favored the increase of developable land available, and the socialist regulation of securitisation funds, which allowed credits not included in the accounts of entities and so do not take the risk.

"The normative system in force at that time created the framework for the hipercrecimiento and hiperfinanciamiento in the real estate business and constructive", says the document, which the commission rejects that the crisis arose "because the citizens were living 'above their means'". "Were the financial institutions that borrowed well beyond their capabilities, and were the regulators and supervisors who had worked well below their responsibilities," he says.

Between 2000 and 2008, sets out the commission credit to the construction sector and promotion increased by 661% and mortgage credit in a 335%. 63% of all the credit to the private sector was concentrated in those years in real estate activities.

"Bad practices in banks and savings banks"

The report also underlines that the "bad practices occur widespread in the entire sector, including banks and savings banks" and that the crisis affected equally to boxes and banks", while, " the text, "the resolution of the associated problems was not the same in one and another case."

"the failure of the boxes could not conclude the success of the banks. The latter saved their international diversification, while in Spain, also experienced difficulties and ad hoc aid", abounds the report, which makes for example the increasing weight of international business in the two largest entities, Banco Santander and BBVA.

with Respect to the different models of management, governance and a possible politicization of the entities, the report notes that "the wrong decisions are taken by individuals or groups of people, regardless of their profession or affiliation", and also the existence of "perverse incentives that promote the taking of wrong decisions".

particular Errors and politicization

One of the trouble spots has been the determination of the guilt of the crisis of the boxes. This point has led to the vote against Citizens, which considers the PP and the PSOE are guilty of the politicization and bad management of the boxes. The report says that "what is behind the bad practice that happened in many credit institutions, both banks and savings banks, are certain groups of people with very specific motivations and interests", and denies that the different ownership of boxes for banks has been "a determining factor in their different exposure to the crisis".

on the other hand, argues that "the professionalism of the senior managers of the savings banks was similar to the one that had the address boxes of the banks." "The assumption of bad practices and making wrong decisions does not depend on, as well as the level of training, but other motivations and inertia," he stresses.

In this sense, attributed the bad practices in the sector to the search for improvements in the account of results "of increasing manner, and continued," and the "establishment of systems of remuneration and incentives linked to the achievement of objectives". A bet that, in his opinion, "promotes a short term vision of management and a neglect of the consideration of other criteria related to the assumption of risks, the ethics or the sustainability of the system".

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