BAD PRACTICES The mismanagement at the heart of the problem continues today, resulting in practices that have kept real estate prices artificially high and masked the bank’s losses, market participants said. After the property collapse, banks and cajas wrote off loans to bankrupt real estate developers in return for taking on their portfolios of unsold properties, which allowed the lenders to avoid registering losses on their own balance sheets.
Exactly right. This was discussed on these forums recently as the explanation for artificially high property prices. The question is are the new government going to force down these prices by ordering the Cajas they have bailed out to write down their portfolios?
That is probably impossible since I know CAM in particular obtained massive funding of around €7bn from the ECB some time ago, offering an overvalued property portfolio as collateral.
The sheer scale of malpractice and corruption that occurred during the boom in Spain is breath taking. They have just only scratched the surface.
There are signs these Cajas are starting to weaken their prices but my best guess they are waiting for the PP to move once in power.