Bankia Bailout Shows Conflicts for ECB as Supervisor

In December 2010, Bank of Spain inspectors delivered a report to their bosses about Caja Madrid savings bank that was grim: The bank faced losses of almost 5 billion euros ($6.8 billion) and needed new leadership.

By the time the central bank’s top policy makers delivered their recommendations to Caja Madrid, they no longer mentioned new management -- and the amount of losses had been pared by almost 2 billion euros.