“The bail-in? In Italy it has created more problems than benefits “

ROME. “The new directive on bank bail-ins is doing more harm than good in Italy. It was created to shield taxpayers from the cost of bank crises, after England, France and Germany had spent mountains of public money to bail them out. Today we see that taxpayers are losing money, savers have lost everything and the financial system is weakened. And this,” says Carlotta de Franceschi, founder of the Action Institute center, professor at Columbia, a past in the big investment banks, and former economic advisor to Matteo Renzi, “is a political issue.”
Shall we dismantle the bail-in, never applied since?
“Or we do the bad bank, setting the conditions for public intervention in advance.”
They’ve already denied it.
“I don’t know if we had the strength to negotiate then. The directive was a Copernican revolution, we should have asked for a transitional period for implementation, and the bad bank. We were all caught off guard, savers, taxpayers, newspapers. We have to go back to the EU Commission. The aim of the directive is not to weaken the system or hit small savers”.
Ours are full of unlisted shares and subordinated bonds. It doesn’t happen anywhere else.

“Rules must be adapted. In England, it is inconceivable that a shareholder is at the same time a creditor of the bank. We have it in the DNA, half the system is made up of former cooperative and cooperative banks. The less sophisticated savers, the foundations, demanded returns a bit lower than the market, but the economy got credit on better terms. Today regulators demand capital increases from banks in the market. You do them, you improve your ratios for a few months, but then you’ve wiped out your customer-shareholders, you betray their trust and the bank fails. What’s the point?”
It happened also to Veneto Banca, of which you were for a few months a board member.

“In that case, going public was a decisive mistake. I’ve never seen a turnaround through the stock market.”
What was the solution?

“A banking partner I thought might emerge, or a highly experienced specialist investor.”
Instead came Atlante, which didn’t have any.
“It would have been better to help our industrial partner and us to ease our suffering.”
Now, like Intesa?
“This is the end of the story.”
What else is wrong with EU surveillance?
“The Directive does not allow for confidentiality and timeliness. The running-in of new institutions on the most delicate system there is, the financial system, is putting stress on a world where issues have always been resolved behind closed doors and at weekends. All over the world, banks are saved thanks to governments or a partner”.
What do you ask the government?

“To think about the future of the system and the tools to accompany it. Social shock absorbers for redundancies, tax mechanisms, and a faster justice, to dispose of suffering. Savers and contributors have given, now let others do their part.”

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