The president of the European Commission (EC), José Manuel Durão Barroso, on Monday blamed the Bank of Spain for making “very significant errors of supervision” that added to the Spanish banking crisis.
Barroso, who is reaching the end of his term at the helm of the EC, said the Spanish watchdog’s mistakes contributed to the real estate bubble and ensuing property crash. He also rejected claims that Brussels 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, known as cajas de ahorro, were particularly hard hit and forced to merge beginning in 2009.
“Let’s talk about who is responsible for the crisis and whether it was the European Union or the bubble,” said Barroso at the opening of a seminar on “Europe after the crisis” held at Menéndez Pelayo University in Santander.
“We often asked [about the situation of the banks] because we’d heard that the banks and especially the savings banks were in bad shape, but the answer was that they were all in perfect shape,” said the Portuguese politician, before adding that Brussels was also being told at the time that “the Bank of Spain was the best central bank in the world.”
“And yet it allowed the growth of private debt, the problems in the housing market, and that entire bubble. And was that the responsibility of the European Central Bank, the International Monetary Fund or [German Chancellor Angela] Merkel? Those were very important supervision errors. And we need to take that on board.”
“It is easy to say that the EU was to blame, but it was indispensable to make adjustments, as Iceland did, which is not part of the EU, or as Britain did,” said Barroso, adding that “it is a lie that the problems were caused by the euro.”
“Let us be rigorous and analytic: the crisis began in the US because of Lehman Brothers and that is not Brussels’ responsibility, either,” he said.
The outgoing EC chief said it was true that the situation was still bad in Spain and that improvements were taking a long time coming, although they would come this year. He also praised the fact that in Spain there were “no major political forces opposing the euro.”