At Least the Bankers Did Well With Christine Lagarde
The ECB offered a bold package of relief to banks. Unfortunately, easing capital rules is a risky move that won’t exactly restore investor trust.
Dangerous forbearance.
Photographer: Alex Kraus/BloombergWith markets in a tailspin because of fears that the world’s coronavirus-hit economies are grinding to a halt, investors are desperately searching for reasons to be confident. The European Central Bank’s decision to let lenders operate through this turbulence with much less capital and cash might achieve the very opposite.
ECB President Christine Lagarde was heavily criticized on Thursday over an emergency monetary package that was deemed insufficient (it left interest rates unchanged) and for failing to display a willingness to do “whatever it takes.” But the menu of relief she offered banks was bold in its breadth and depth. While she might not have offered much solace to Italian bondholders, she cannot be accused of wavering in her support for the finance industry.