Rajoy’s Credibility Hurt by PP’s Role in Spain Woes: Euro Credit

Prime Minister Mariano Rajoy’s credibility is being undermined by the role of his People’s Party in the failure of the Bankia group, Spain’s third-biggest lender, and the emergence of more unpaid government bills.

PP-run regional governments in Madrid and Valencia orchestrated the 2010 merger of seven saving banks to form Bankia, which was nationalized on May 9. The same regions under Rajoy’s party control were mostly responsible for the revision of Spain’s 2011 budget deficit to 8.9 percent of gross domestic product from an earlier estimated 8.5 percent.