The decree that we are about to approve is a necessary intervention. NoLet's not save the bankers, but let's save families and businesses who have relationships with the two banks, the workers, the local area.
It is easy to understand what would happen if the decree were not converted. The next morning, tomorrow itself, depositors would rush to withdraw their savings and banks would be forced to recall loans with immediate effect.
It has been said that it is not true, that this is an exaggeration, because there is a Deposit Guarantee Fund. But the Fund guarantees deposits up to 100 thousand euros and many deposits, especially of even small businesses, are above this threshold. And smaller depositors in uncertainty, despite all the reassurances, would still end up withdrawing their deposits. A considerable mass of assets of the two banks would be thrown onto the market with destabilizing effects also on the bond market.
Furthermore – and above all – it would come confidence in the entire Italian banking system was undermined.
Of course, it is safe to assume that there were other possible solutions and that over time different choices could have been made. Beware of hindsight though.
First of all, I recall that, in the discussion we had in this hall in March 2015 on the law for the transformation of cooperative banks, the opposition told us that the sick banks were the spas, not the cooperative banks. I quote a sentence that was said in the classroom, with excellent oratorical emphasis, by a member of the M5S:
“We cannot allow ourselves to be told that popular banks are fragile and that they must be transformed into joint stock companies. We cannot allow one of the reasons underlying this decree-law to be the scarce availability of credit to businesses, when data in hand - data in hand, no chatter – the only ones that have continued to maintain credit for businesses during the crisis are the cooperative banks”.
The popular ones were defended by almost everyone, by entrepreneurs who often sat on the boards, by the press and by local politicians, most recently by some oppositions in this hall. Precisely because they gave credit easily and paid little attention to the principle of sound and prudent management.
Ma why did the problems of these two banks emerge? The problems were generated by the recession and by a sick governance, precisely the one that the opposition stubbornly and stubbornly defended, in contrast with the capitalistic model of joint-stock companies.
But the problems came to light following the European stress tests of 2014, when to improve capital ratios the two banks began to ask their customers to buy shares against the loans granted: an illegal practice which was sanctioned and which led to the Italian and European supervision to declare that the capital raised in this way was not - so to speak - real capital and in any case was no longer computable for the purposes of capital ratios. Hence the emergence of the crisis.
In March 2015 we did not know about the specific problems of the Veneto banks, but we understood very well - and we said it - that the cooperatives would not be able to meet the capital strengthening needs that had emerged not only in Italy but throughout the world, with the great crisis. And even on this there was the total incomprehension and stubborn closure of the opposition.
Today, on the Veneto banks, there are those who criticize the government for having wasted time with the hypothesis of precautionary recapitalization, which in the end was not accepted by the European Commission. And there are those who criticize him for the opposite reason: not having challenged the European Commission by insisting on that operation anyway.
It should be recognized that precautionary recapitalization has the virtue of clarity: it is an operation in which the State puts money and in exchange for it obtains shares, typically controlling shares. So the money is put in, but "they command": temporary nationalization, as is being done for the MPS.
To the government this seemed the most reasonable hypothesis. It is therefore understandable that he has been going down this road for many months. Was it possible to proceed without the consent of the Commission?
The answer is certainly not. We would have had very strong reputational damage: we would have been accused of an offense, that is, of giving the banks unauthorized state aid. This would have questioned the very sustainability of the operation.
The Commission would then have asked the two banks to return the money, as happened in the past with other state aid declared illegitimate, such as milk quotas or public contributions for job training contracts. For the same reason it would have been impossible to use the resources of the Interbank Deposit Guarantee Fund.
So this was a path that could not be followed, especially after the European Supervisory Authority declared that the two banks were in a bankruptcy situation. And this happened - it should be remembered - only on June 23, that is the Friday before the Sunday in which the decree was issued.
The hypothesis of precautionary recapitalization could have been renounced earlier in order to do things, as some say, with more adequate timing: would there have been time to hold a public auction? Would better conditions have arisen for the taxpayer?
The answer is once again certainly negative. To conduct the auction, it is necessary to declare the state of the banks (insolvency or near insolvency) and what to do with them (liquidation). Once this news is public, the problem must be solved before the doors reopen. Otherwise a huge trouble happens.
This is the reason why the auction was carried out at national and European intermediaries in a very short time (a few days), moreover according to the indications and schemes envisaged by the European Commission. The criticism of those who say that, if there had been more time, more favorable conditions would have arisen for the taxpayer and therefore less favorable to the transferee who was then chosen, i.e. Banca Intesa, makes no sense. This critique fails to deal with the reality of what it means and how long it takes to manage a bank's crisis.
Another criticism leveled against this decree is that we hastily innovated the liquidation procedure. This is only partially true, and in this regard I think two observations should be made:
European rules on bail-in and bank crisis management are new. And the common feature of all the banking crises in Europe to date is that they have never applied the bail-in. So everyone had to find innovative ways. And this happened in a transitional situation in which too many authorities played a role in the decision.
Crises always have their own specificity and can hardly be managed without innovating.
This second point deserves further study, also because an even more radical criticism of the government originates from here: each crisis has been treated in a different way, which has given rise to unequal treatment of the various bank stakeholders.
Certainly, inequalities should be avoided as far as possible. But the simple truth is this: the European Union's attempt to write a book of rules that is rather rigid and applicable in the same way to all situations has effectively failed.
This failure, or at least serious difficulty, has various reasons. I would like to underline one that concerns the deep root of the problem.
Crisis interventions must always have a margin of discretion, a point which is well known to all experts, at least since 1873 when Walter Bagheot published in a valuable little book entitled "Lombard Street", which has returned to great interest in recent years.
The point is that, if a book of rules is written in which it is known when and how to intervene, bankers and their shareholders will tend to take on excessive risks, because "if things go badly, the State (or the Central Bank) pays ”. To prevent this from happening, i.e. moral hazard, it would be sensible to have no rule book and to announce that the state will not intervene in the event of a crisis, except to save savers. However, when the crisis occurs, the State must intervene at least in cases where the entire system risks being overwhelmed. Hence the indication that interventions must be decided from time to time with margins of discretion, depending on the characteristics and severity of the crisis.
It can be considered that this is in many ways an unsatisfactory state of the art. Europe has tried to overcome it, but we must acknowledge that it has not succeeded so far. There is currently no crisis management manual.
I would like to point out that there is not even in the United States. And that even in the United States we proceeded by successive attempts and with many errors. It is worth recalling some key passages of that experience because they present many elements for reflection to put what is happening here in the right light, also in view of the reasoning that we will have to make in the bicameral commission of inquiry into the banking system.
I see that some political forces have already passed the sentence: the authorities are guilty. With this approach it is difficult to do serious investigative work. I find it more useful to prepare us for that work by trying to understand what happened in Italy and how it compares to what happened elsewhere.
In summary, Lehman Brothers bank was allowed to fail on September 15th. The day after, the Fed saved AIG, the largest American insurance company, with an intervention of 85 billion dollars. In the following days, some banks were saved with temporary nationalization, as we are doing with MPS, others with mergers into larger banks and with the help of public resources, as we are doing with the Veneto banks. The same Paulson Fund, worth 700 billion, approved on 3 October by Congress, should have guaranteed or taken charge of the toxic assets of the banks. In reality it was mainly used for recapitalisations.
Faced with these facts, many members of Congress leveled against the American authorities (the Bush administration and Bernanke's Fed) accusations that closely resemble the accusations being leveled against the Italian authorities today. I list them briefly:
1) It is unacceptable that Parliament has been bypassed,
2) It is unacceptable that nothing is known about the use of 85 billion dollars to save Aig, (this decision was made in total solitude by very few people!),
3) Lack of a coherent strategy to face the crisis,
4) It was unacceptable that the problems had not been understood and addressed in time by the supervisor,
5) The FED was conniving or even dominated by the big Wall Street banks (a slanderous accusation that was later taken up by the Congressional investigation committee, the Warren Commission).
6) We are hearing all these accusations today in relation to an intervention worth 5 billion, not 85 or 700 billion.
Barack Obama, then Democratic candidate for president, did not join in the criticisms of convenience, and, at the end of 2008, as soon as he was elected president, he chose as Treasury minister precisely that Tim Geithner who, as chairman of the New York Fed, had managed first hand all the banking crises. in January 2010 he renewed Bernanke's mandate as Fed Chairman. These choices cost Obama a lot in terms of populist reactions. Obama was accused of being the bankers' president. The Occupy Wall Street movement was born in the United States and was initially directed against the Obama administration, although it later spread to many other countries.
Indeed Obama's choice was farsighted and courageous because Geithner and Bernanke, excellent central bankers, had the right knowledge to face and resolve the crisis, which was later done, fortunately for all of us.
Today we know that, if after the failure of Lehman the other big banks had not been saved, the global crisis would have had even more harmful consequences than the already terrible ones we have experienced. And we will never know if all this could have been done with lower costs for the taxpayer.
We hope that Obama's wisdom will prevail in the end in Italy too and that in any case serious analyzes will be carried out, free from prejudices against our authorities.
These considerations on the United States also help us to respond to the heaviest accusation that a part of Parliament is making against the government today: that is, of having confronted Parliament itself with a fait accompli. And of not having given Parliament the possibility or the time to amend the decree. This is a real problem, but it is a problem that has arisen all the time and everywhere in cases of banking crises. I repeat: the moment the crisis emerges, it must be resolved immediately.
I would also add that it is almost impossible to resolve a serious crisis before it explodes. Many today say that action should have been taken much earlier on the entire Italian banking system, between 2011 and 2014, in any case before the rules on state aid came into force, as did Germany, Spain and others.
Maybe. But the experience of recent years tells us completely unequivocally that governments are able to intervene by putting public money in the banks only when the crisis is full-blown and there for all to see. Only then does public opinion understand, perhaps, that intervention is necessary. The US never would have done it without the collapse of Lehman and the devastating crisis that followed. The same goes for Germany, Holland, the UK.
We didn't have a systemic crisis, we had trouble spots that could have given rise to one, which is very different.
I also recall that the only interventions that were made before 2015 were the Tremonti and then the Monti bonds for MPS. And that these interventions have been used extensively - and are still used today - in political controversy, to say that the PD intervened to save "his" bank. Which is false, like false is what they say about Banca Etruria, which also did not receive a euro, saw its directors sanctioned, was placed in receivership and finally put into resolution. Who knows what the favor would be!
I would add that, in the case of Italy, we should have done as in Spain, declaring that the crisis was systemic, drawing on the European Stability Mechanism (MES or ESM) and submitting ourselves to the program imposed by the so-called Troika. I don't know how many in this Parliament would have approved such a choice.
Being the rapporteur of this provision in the Budget Commission, I would like to clarify a point relating to the operation's accounts. Some deputies have argued that it is unrealistic to hypothesize, as the Technical Report does, a credit recovery of 9,9 billion out of 17,8 billion in non-performing loans (to which must be added 1,6 billion from the sale of shareholdings). The problem is that these colleagues compare the estimate of the recovery that can be obtained over many years, the one referred to in the Technical Report, with the selling prices on the non-performing loan market, which are 17, 20, 25% . The comparison in these terms is therefore not homogeneous. The data in the Technical Report is obtained on the basis of the real experience of the banks and of SGA itself in the case of Banco di Napoli. There are specific studies by the Bank of Italy which lead to this result, also taking into account the fact that the non-performing loans transferred to SGA include not only non-performing loans, but also probable defaults (for 8,4 billion). It is always legitimate to discuss the hypotheses of the Technical Report, but, if you want to do so, do it on the basis of real data and homogeneous comparisons.
Someone said that, if these are the accounts, it is not clear why the two banks have been put into liquidation. The outgoing directors, those who were chosen by the Atlante Fund to remedy the problems of past management, could do their own debt collection and restore the banks without the need for liquidation and the intervention of Banca Intesa. Thus we return to the hypothesis of precautionary recapitalization. The fact is that this argument did not convince European supervisors who explicitly said that the plans submitted by the two banks were not credible. And for them to be so, a private investor had to be willing to put in at least one billion, which didn't happen.
Finally, the idea that the Interbank Deposit Guarantee Fund could be brought in as a private investor is certainly imaginative, while a dispute is underway on this very point at the European Court of Justice.
I conclude with the hope that, in this or other measures, a way will be found to accommodate two requests that have been formulated by the rapporteur, Mr Sanga regarding the date of 1 February 2016 for the relief measures in favor of subordinated bondholders and the possibility of offset the capital losses on shares without having to wait for the liquidation to close.
However, the provision must be approved as soon as possible in order to eliminate any possible source of uncertainty regarding the fate of the two banks.
