More taxpayers’ money for the banks

Within 24 hours, after the European Sting published on Thursday an article entitled, “Fair completion rules and the law of gravity don’t apply to banks”, and the responsible EU Commissioner Joaquín Almunia, Vice-President of the EC blessed as legitimate the rescue of the Dutch bank and insurance company SNS REAAL by the country’s exchequer with more than €4 billion. He said that the bailout is “in line with EU state aid rules”. If it was a subsidy to the Dutch SMEs engaged in the repair of bicycles, the Commission would have intervened asking the technicians to return the money to the state plus interest. It is as if handing out taxpayers’ money to financial companies, is the most natural thing of the world and the real sector companies small and big, have nothing against it, despite the fact that the banks do not lend them the money they receive for free. In the rare case that a bank accorded a new loan to an SME or a consumer during the past four years, the interest rate was always in the double-digit region. The untouchables Unfortunately it’s not only the Commission that treats the financial sector companies as if they don’t belong to this world. Invariably all the western world governments, at the brilliant exception of Iceland, keep spending their taxpayers’ money in injecting billions into banks. Thank God, Reykjavik proved to the world that our modern societies can survive even if all banks go bust and other, new financial firms, are born as it was usual until now in the economic system that once was capitalism. Nowadays 130 banks in the Eurozone have been elevated to the heavenly category of ‘systemic’ making them untouchable or probably cherubs? Coming back down to earth, the relevant Press release issued by the Commission yesterday goes like this, “Because of persistent problems following the write down of its property finance portfolio, the Dutch State decided in February 2013 to nationalise the group SNS REAAL and to inject new capital. In this context, the Dutch State notified the following state measures to the Commission: *a €1.9 billion recapitalisation of SNS Bank in the form of ordinary shares; *a €300 million recapitalisation of SNS REAAL in the form of ordinary shares; and *a bridge loan of €1.1 billion to SNS REAAL to secure its short-term funding needs.” Also as part of the restructuring plan, the Dutch exchequer will spin-off the property finance activities of this bank and insurance firm into a bad bank at a transfer price above the market value, amounting to an additional aid of € 859 million. In total the poor and the rich Dutch taxpayers alike will pay €4,159 million to revitalise this financial zombie. Politically correct Commissioner Almunia in order to be legally and politically correct noted that “The Commission found that the State aid granted to SNS REAAL is necessary to preserve the stability of the Dutch financial system”. Obviously, Sigmundur Davíð Gunnlaugsson, the Prime Minister of Iceland would object this. Last time he was in Brussels he delivered a lesson or two to the Brussels’ dignitaries, about how his country treated all those fraudulent bankers, who pocket the profits from their risky bets and when those ‘investments’ go sour they ask the state to pay the bill. One after the other, the major shareholders and the top management of the three Icelandic banks Kaupthing, Landsbanki and Glitnir Bank which went bust, are convicted to long imprisonment sentences. Their crime is not that they went bust, but what they did before that. In any case the paradigm of Iceland remains as a reminder to everybody that banks and bankers should be left to go bankrupt as any other business. Just take care that they didn’t have the opportunity to cheat people about security and yields of ‘investments’.