Editor’s note: This article was first published in May 2012, written on 14 May, days after the Spanish government took control of Bankia. The “current situation” it describes is that of May 2012. Bankia later received a large state bailout and was absorbed by CaixaBank in 2021.
Let me start by saying that I fully understand what led to the creation of the #CierraBankia (“Close Bankia”) movement. What’s more, I admire the fact that Spaniards are finally showing their outrage in a far more eye-catching way, one that will be heard more than protests in Spain’s town squares. If you demonstrate in the street, you’re a bit of a nuisance; but if you go after a bank, you scare people, and a lot.
The unexamined danger of the #CierraBankia movement is failing to foresee the consequences for Spaniards themselves. In the delicate situation Spain is going through, with the lack of confidence our country faces abroad, fear of a possible corralito (a freeze on bank deposits like the one Argentina imposed in 2001) would trigger a massive flight of money.
Like it or not, a country’s economy is held up by its financial system. Is the financial system corrupt? I completely agree, and in fact the executives running these institutions, who got us into the hole we’re in, should be held accountable.
Make no mistake: in this case, the success of the initiative would be our greatest failure as a country. Faced with the fear of mass account closures, and of the initiative spreading to other banks, the dreaded corralito would clearly follow, and we would have brought it on ourselves.
Public money is already in Bankia. If we managed to close Bankia, that public money would be lost, along with thousands of jobs held by employees who are just like us, because you can be sure the top executives would carry on in their roles somewhere else. Distrust of our country would grow, we would have trouble selling our debt, and there would be hundreds of other consequences that are very hard to predict but that no Spaniard would want to see.
I’ll say it again: I understand and admire the movement, but nobody with even a basic knowledge of economics who cares about their country would think of forcing a financial institution to close right now, unless they enjoy living in chaos.
Be careful what you wish for, because you might just get it.
As I write, Bankia shares are plunging another 9.26% on the stock market.
Featured image: Alvesgaspar, CC BY-SA 3.0, via Wikimedia Commons.
