Mistakes by Spanish supervisors helped to worsen the country’s banking crisis as they failed to recognize the scale of threats including a housing bubble, European Commission President Jose Manuel Barroso said.
“The answer always given was that everything was perfect,” Barroso said in response to audience questions after a speech in Santander, Spain, today. “Who’s responsible? The truth is there were very significant errors of supervision and that has to be taken on board.”
Spain was forced to take 41 billion euros ($55.5 billion) in European aid to shore up its banking system in 2012 as losses linked to real estate at former savings banks including Bankia SA threatened to undermine the government’s finances. Spain began the process of repaying taxpayer aid when it raised 1.3 billion euros in February by selling a 7.5 percent stake in Bankia, a lender that needed 22 billion euros of support to avoid collapse.
“It wasn’t the European Union that created the problem,” said Barroso. “Whose responsibility was the bubble? Supervision was purely conducted nationally.”