At the time of the entry into force of the consolidated banking law in 1993, which sanctioned the transformation of the bank from a mostly public institution into a private enterprise and the affirmation of the universal banking model, someone asked if the authorities had their own map for managing the industrial reconfiguration implicit in the changes promoted with the new regulatory framework.
The answer was that natural selection by the market would have been more efficient than any exogenous intervention, which would have had a commanding flavour. The system has undoubtedly transformed since then, focusing on one-by-one operations, but that doesn't seem to make it any more robust. Are we dealing with a sort of reverse Darwinism?
It is also idle to ask whether this story should be treated as a series of single episodes, however serious, or as a systemic crisis.
What matters is the impact of banking crises on the economy, on the degree of confidence of savers and on the ability of the banks themselves to be able to carry out, through credit, financial and fiscal discipline actions towards their main customer, i.e. the Italian small and medium enterprise. These are the real socio-economic costs, beyond pedantic calculations in terms of effects on the taxpayer.
Only if it were possible to make a count, however approximate, of their effects on the slowdown in the country's economic development, up to the decline many are now talking about, would we find the true weight of the system's dysfunctions.
Now that a renewed banking policy is being invoked by many, will its results be useful for influencing governance, the transparency of banking services and the renewal of the industry? Under what conditions will financial education elevated to the public interest act on these factors?
In fairness, we must also touch on the key to opportunistic behavior by customers in the event of a bank crisis, an issue to which the ABI's position in favor of publishing the names of Montepaschi's first hundred insolvent debtors refers, a measure of how much banks have been themselves victims of undue conditioning by lobbies and customers. These are behaviors that occur when the debtor places himself in the position of exploiting the greater contractual power, due to the weakening of the counterparty, also finding support in politics.
An anecdote, taken from the Banco di Napoli affair, immediately after the decision to pass the enormous mass of bad loans to the bad bank set up for the purpose, can help explain the point better.
Well, a dear colleague of ours, in a supervisory position of responsibility at the time, was approached by a lawyer who kindly asked him to check if some of his clients were on that list, kept in the strictest confidence. Immediately that colleague understood that being included would allow debtors to delay the fulfillment of their obligations. Obviously he refused to correspond to the request, which would have immediately favored moral hazard behavior by subjects who were still solvent. But the secret, as it is easy to understand, did not last long.
Sic transit gloria debtrum atque creditorum! There are numerous learned quotations that we could make at this point on the relationship between learning from past cases and future behaviors, asking ourselves why this process seems so difficult for us to take root.
Reasoning about these things is complicated, also because there is a lack of data, information and organic analyzes on banking crises. In formulating this list we have mostly relied on our own experience and memories. In the search for reliable sources, we found traces of some cases in the historical-geographical map of the Intesa Sanpaolo historical archive, but we were not able to fully access them. In any case, it concerns the credit and financial institutions which over time have merged into what is now one of the major European banking groups.
The remaining cases are singularly dispersed in the periodic reports of the authorities, in the journalistic reports of the moment, in articles by some willing scholar and in judicial documents. In the network era, there is no comprehensive documentation to consult, for a better understanding of our most recent banking history.
All the crises mentioned were settled with interventions by other banks, with sacrifices borne by savers or taxpayers or with a combination of these methods, believing that the social cost of bank failure, small or large, would in any case be greater.
With these repeated reassurances, the system was stranded in 2014 on the shores of the Banking Union, with little awareness of the effects of the new European crisis management rules and without an effective policy to change the stubborn and structural causes that envelop it, as shown the exhausting negotiations underway with Brussels and Frankfurt for the solution of the still open questions.
These causes have three names:
1) baroque and plethoric governance based on the role of subjects such as the Foundations, on the one hand reviled, on the other acclaimed as salvator mundi and on oceanic shareholders' meetings from sports halls, both corporate watermarks that make management irresponsible, with rich bonuses regardless of the results and securities to be capitalised, just released, in other prestigious positions;
2) enormity of the non-performing loans resulting from the crisis, but also of lax behaviour, from moral hazard and adverse selection, knowing ex ante that there will always be those who will pay for the instability, i.e. citizens directly or according to refined transitive techniques;
3) sluggishness in the production of new banking services, caused by a poor aptitude for investments, given that we are the country where even more cash circulates among those in the Eurozone.
That's why we don't feel like paying attention to the two objections that we already seem to hear in the face of this short, but also long and not edifying story, and which sound more or less like this. After all, a bank crisis is part of the essence of capitalism, that creative destruction that gives life to the system itself.
After all, the citizen as a saver and as a taxpayer hasn't lost much, also neglecting the fact that many large debtor companies have been repaid with public money to repay the banks.
A true financial education should find it increasingly difficult to accept ex post motivations, which recall Leibniz's demonstration of the best of all possible worlds. It is to be believed that many are definitively tired of always and only playing the part of Candide.
Read also "Italian banks: all the crises of the last 35 years, from Banco Ambrosiano to today"
