Who watches the watchmen?

Deducing some lessons from this crisis is the first obligation of the institutions most directly linked to it. The complexity of the emergency and, in any case, of its sprawling development in the last five years, advises against pointing the finger at any single agency. Just as in any other economy, the problems of the Spanish banking system are hindering recovery. The banks’ defective management of recent years is now consuming large quantities of public resources, while basic social services and indispensable public investments are skimped on or withdrawn. The severity of this crisis has been aggravated by errors, not to mention actions that were manifestly imprudent or of doubtful legality. This is what may have occurred in the Bank of Spain, if the accusations made by some of its inspectors are true.

The reports of the association, to which some 80 percent of the Bank of Spain’s inspectors belong and which this newspaper has published, are not exactly reassuring. The fact that they have been requested by the present governor, and that they harp on longstanding demands maintained by the association, is no reason not to take them into careful consideration. It is reason enough, in any case, to press for complete clarification of the charges of malpractice, some of which are indeed grave and alarming. The accusation that “the usual form of reaction to evidence of crime is to look the other way” sums up the need for the commission now created by the central bank’s governor, Luis Linde, to verify in stringent detail each one of these claims, and to bring forward as soon as possible its conclusions on the technical quality and the legality of the prevailing supervisory practices, and on the conduct of the persons responsible. No less grave are the accusations concerning the interference of the banking industry and of politicians in the central bank’s supervisory functions — given the presumption of absolute independence assigned, at least formally, to this institution.

A very short time has sufficed to dump overboard the sterling reputation of one of our country’s most respected institutions, particularly prominent in the task of bank inspection and supervision, internationally recognized and hardly ever questioned in recent decades. This respect earned the Bank of Spain great influence in the formulation of economic policies of each successive government, even before it enjoyed a formal statute of autonomy. For the good of everyone, and for the credibility of the Spanish economy as a whole, it is highly advisable that the cracks revealed by these reports not be merely papered over. The Bank of Spain must convincingly show, not only that it does not allow itself to be “captured by the regulated industry,” or influenced by the government of the moment; it must also possess mechanisms for assigning blame to those who abuse the protection enjoyed by the banking system.