Bank greed is the “indisputable origin” of Spain’s property crash, according to Celestino Corbacho, Spain’s Minister of Employment.
“As the financial sector is always telling labour markets what they should be doing I am going to remind it of something; it is responsible for the real estate situation. It was the financial sector that supported and encouraged the inflation in the real estate sector, ” said Corbacho in an interview this week, going on to argue that lose lending practises and “120%” mortgages encouraged over-building during the boom, which caused the glut today.
Spain’s economic situation today would be much healthier if banks hadn’t thrown money at “short term, high profit sectors, at the expense of strategic long-term sectors,” said Corbacho, who lamented the lack of a mea culpa from the financial sector. “I would like to hear someone responsible from the financial sector come out one day and say: we made a lot of money in that period, but we were probably mistaken.”
“We wouldn’t be here if it hadn’t been for the model of financial greed we have,” said Corbacho bluntly.
Corbacho may be right to blame banks for their part in Spain’s property crash, but he had nothing to say about another group with plenty of responsibility for the mess: the government and politicians just like him.
Thoughts on “Government minister blames Spanish real estate crash on bank greed”
Well… here’s a minister who has hit the nail squarely on the head. Of course it is the banks’ greed that has vastly assisted the cronic economic climate that we are presently in. Tis the same in the UK…. the banks will ‘fleece’ you for whatever they can get away with. Here in Spain, they even charge you to make a transfer of money out of your account, for in my case, paying the rent. It is absolutely appaling. Greed…greed… and nothing but greed.
Yes I agree the Spanish banks greed was incredible – they were making huge mortgage loans way over and above even the pre-crisis inflated valuations, adding huge (illegal fees) to unsuspecting foreigners, selling insurance etc etc just so that they could all earn commissions and bonuses. Then when it crashed they panicked (especially some local managers we know). Well now all we see is bank branches closing – one bank here had 5 offices in a few kms!!