The president of the European Commission (EC), José Manuel Durão Barroso, has blamed the Bank of Spain for making very significant errors of supervision that fuelled the Spanish banking crisis.
Barroso, who is coming to the end of his tenure as head of the EC, said mistakes by the the Spanish watchdog contributed to the real estate bubble and subsequent property crash and rejected claims that Brussels somehow holds some responsibility for the crisis.
In 2012 Spain accepted a European bank bailout to support a sector that was struggling from overexposure to non-performing real estate loans. Regional saving banks, cajas de ahorro, were particularly badly hit by the crisis and were forced to merge after 2009.
Barroso added that the EC had frequently asked about the situation of the Spanish banks, particularly the savings banks, but the answer was always that they were all in ‘perfect shape’. Also, Barroso said that Brussels was also being told at the time that the Bank of Spain was ‘the best central bank in the world’.
As we subsequently found out, to our cost, the banks were far from in ‘perfect shape’.