Ooooh, oooooh, scary headline! scary headline! scary headline!
This is the heart of the statement(s) I made the other day.
WHY did Spain's banks lend billions of euros that they might never get back?
Have the borrowers simply not repaid it? Then the banks need to go after the borrowers, not the ECB or the IMF or the taxpayers of ANY country. (Also, who are these borrowers and why are they not repaying their loans?) ***
Did the borrowers not put up any collateral? Well, that's the banks' fault for not demanding collateral. If the banks erred, why should they be bailed out by someone else? (What will stop them from making more loans without collateral?)
If the borrowers did put up collateral, why are the banks not foreclosing (legitimately) on that collateral? If they're not foreclosing, then they're not availing themselves of normal business remedies to their problems. Unless and until they foreclose on all the collateral put up for bad loans, they are not deserving of any bailout.
If the borrowers did put up collateral but it is no longer worth what they borrowed against it, that's too bad. The banks still need to foreclose on it, get what they can, and move on.
If in fact the banks' losses are not related to normal banking operations, then they've acted irresponsibly and it's their own tough luck. Maybe if they fail this time, they won't make the same "mistakes" next time.
***It should be remembered, too, that if the borrowers do not repay and are not forced to surrender any collateral, then they, too, are being bailed out. That's why it's important to know who they are and why they haven't repaid their loans.
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