Policies. The transaction for the Veneto banks will be financed by the decree rashly approved by both Houses of Parliament last Christmas: 20 billion of guarantees for the rescue of banks to be covered by public debt

First our banks, then our children

After arguing for months that Banca Poolare di Vicenza and Veneto Banca needed a ‘precautionary recapitalization”, meaning that they were fundamentally “sound” banks that needed additional support, the Gentiloni-Padoan government suddenly changed its rout, declaring them bankrupt and putting them into liquidation.

The Council of Ministers thus approved a legislative decree providing for the acquisition by Intesa Sanpaolo – at the price of €1 – of the two Veneto banks and Premier Gentiloni immediately launched a heartfelt appeal for “Parliament to support this very important decision as it deserves, that is, as broad as possible.”

Meanwhile, Carlo Messina, CEO of Intesa Sanpaolo praised himself for having “safeguarded more than 50 billion in savings entrusted to two banks and protected 2 million customers, including 200,000 companies operating in the most dynamic areas of the country”. He did not leave out repeated promises on protecting jobs.

Could the generous support of the European Union miss? Of course not: the sudden federalist Margarethe Vestager, EU Commissioner for Competition, considers the State aid as “necessary to avoid economic tensions in the Veneto region.” Two banks in serious financial difficulties, a banking giant absorbs them, the Italian and European institutions agree: what is the problem?

Just one: the community pays the bill, we pay all of it.

The decree provides for an immediate public spending of €5.2 billion to guarantee Intesa Sanpaolo zero risk on the whole operation and 12 billion government guarantees on future risks.

In practice, Intesa Sanpaolo absorbs, in addition to the branches and staff (let’s see if once on shore we pray no more) all solvent credits, while the country is burdened with high-risk and bad loans.

All is funded with the legislative decree approved as quick as lightning by both Houses of Parliament among the toasts during the last Christmas holidays: 20 billion of guarantees for bank rescues to be financed by public debt. But these guarantees are already insufficient, given that, if we add on those related to MPS on one side and the “gang of four” (Etruria, Marche, Cariferrara and Carichieti) on the other, we’re already well above 30 billion .

Yet “our banking system is sound, risk-free and family savings are safe,” wrote Minister Padoan on Twitter on October 31st, 2014. “There is a definite maneuver on some banks, period,” but the system “is much stronger than what some investors legitimately fear,” Renzi assured in an interview on December 13th 2015, after the first cracks. “We will address the problems related to specific cases of our banking system, which is solid, and is contributing to the recovery by financing the economy”, said Gentiloni as recently as six months ago.

Turns out this wasn’t the case. But the banks, bred for decades with the principle of too big to fail or, as in this case, too interconnected to fail, know they can overcome any risk limit and arrogance, with the certainty that, in the end, the public sector will intervene.

The state at the service of the banks is in fact the only certainty that allows the priests of market fundamentalism to be able to continue their sermons in mainstream media. The world is strange at the time of financialised capitalism: the national debt, touted by governments and technocrats as collective guilt to be expiated and used as a cudgel to expropriate labor rights, common assets and public services, suddenly becomes a gentle rose to the rescue of two banks driven to failure after years of managerial decisions based on patronage, corruption and complacent controls.

The demystification of the ideological narrative on debt and the claim of a new public and social finance, since the socialization of Cassa Depositi e Prestiti – a public bank- is perhaps what is lacking in the analysis of those who even at this time propose to march, from below and with an inclusive strategy, to set up an alternative option for the country.


Subscribe to our newsletter

Your weekly briefing of progressive news.

You have Successfully Subscribed!