{"id":44760,"date":"2025-06-06T09:00:00","date_gmt":"2025-06-06T07:00:00","guid":{"rendered":"https:\/\/www.11onze.cat\/?p=44760"},"modified":"2025-05-28T13:41:58","modified_gmt":"2025-05-28T11:41:58","slug":"does-banking-supervision-work","status":"publish","type":"post","link":"https:\/\/www.11onze.cat\/en\/magazine\/does-banking-supervision-work\/","title":{"rendered":"Does banking supervision work?"},"content":{"rendered":"<div class=\"component text\">\n  <div class=\"container\">\n\n\n    <div class=\"row\">\n      <div class=\"col  col-lg-8  offset-lg-2\">\n        <h3><b>The cycle of financial crises in recent decades has highlighted the limitations of the current models of banking supervision in ensuring the solvency of banks, the stability of the economy and confidence in the financial system.<\/b><\/h3>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Banks play a fundamental role in the economy, therefore <\/span><b>good banking supervision is a critical element in maintaining the soundness and integrity of a country&#8217;s financial system<\/b><span style=\"font-weight: 400;\">. Yet, time and again, we see how regulators are unable to prevent the mismanagement of these institutions from having disastrous consequences for the economy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Essentially, banking supervision involves the regulation and monitoring of banks&#8217; activities by the competent authorities. These supervisory bodies have to <\/span><b>ensure that banks comply with regulations and adequately manage the risks<\/b><span style=\"font-weight: 400;\"> inherent in their operations to ensure their solvency.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Yet the promiscuous relationship between the banking and political classes has facilitated deregulation and ineffective supervision of the financial sector, leading to risky and irresponsible practices by the monopolies that control the market. This reveals <\/span><b>an unwillingness to serve the public interest that often results in economic devastation<\/b><span style=\"font-weight: 400;\"> that taxpayers end up paying for by bailing out banks with public money.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>When banking supervisors fail to do their job<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The 2008 financial crisis originated from the 2006 housing bubble in the United States. A credit boom was accompanied by <\/span><b>excessive leverage built up by the banking sector fuelled by cheap credit<\/b><span style=\"font-weight: 400;\"> and lax regulation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Financial institutions offered subprime mortgage loans to people with questionable financial solvency, <\/span><b>granting credit to customers with low incomes or without adequate verification of their ability to pay<\/b><span style=\"font-weight: 400;\">. At the same time, financial derivatives played a key role in amplifying the crisis. These investments were initially considered safe and low-risk, as credit rating agencies gave them a good rating.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The report of a commission of enquiry set up to investigate the crisis&#8217;s causes highlighted banks&#8217; excessive risk-taking<\/span><b> and negligence by financial regulators<\/b><span style=\"font-weight: 400;\">. In particular, it criticised the reduction and failure of financial regulation by the Federal Reserve during Alan Greenspan&#8217;s tenure.<\/span><\/p>\n<p><b>Deregulation and lack of oversight<\/b><span style=\"font-weight: 400;\">, however, were not new, as it was the cornerstone of &#8220;Reaganomics&#8221; during the 1980s. President Reagan&#8217;s administration had laid the foundations that inspired the policies put in place by his successors and that culminated in the 2008 financial crisis.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>Auditors call ECB banking supervision into question<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The collapse of Credit Suisse, accompanied by the failure of Silicon Valley Bank and Signature Bank, raised the spectre of Lehman Brothers and triggered panic in the markets. Governments and regulatory agencies <\/span><b>assured us that we did not have to worry about the safety of our savings and the stability of the financial sector<\/b><span style=\"font-weight: 400;\"> because, despite appearances, they had done their job.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Well, it turns out that no, they haven&#8217;t done their job this time either. <\/span><b>A <\/b><a href=\"https:\/\/www.bankingsupervision.europa.eu\/ecb\/pub\/pdf\/annex\/ssm.pr230417_annex.en.pdf\"><b>report<\/b><\/a><b> published by the European Court of Auditors has called into question the ECB&#8217;s banking supervision<\/b><span style=\"font-weight: 400;\">, warning that the capital requirements for the riskiest banks are insufficient and that supervision was not stepped up for banks with persistent credit management problems. The report notes that the ECB &#8220;does not use its supervisory tools and powers effectively to ensure that identified risks are fully covered&#8221;.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As with Lehman Brothers, Credit Suisse <\/span><b>was given a clean bill of health by regulators and rating agencies shortly before the collapse<\/b><span style=\"font-weight: 400;\">. In fact, DBRS Morningstar was the first global rating agency to cut Credit Suisse&#8217;s credit rating, less than a day after the Swiss central bank was forced to bail out the financial institution. In short, yet another failure on the part of the supervisors and rating agencies that are supposed to look after our interests.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once again, it seems that <\/span><b>the interests of the banks and a select minority have priority over the will to serve the public interest<\/b><span style=\"font-weight: 400;\"> and that the so-called supervisors simply serve to perpetuate the usury of the powers that be that justify their existence. We have all heard Albert Einstein&#8217;s famous phrase: &#8220;Insanity is doing the same thing over and over again expecting different results&#8221;, all, except those in charge of banking supervision, apparently.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>If you want to discover the best option to protect your savings, enter <\/b><a href=\"https:\/\/serveis.11onze.cat\/en\/preciosos-11onze\"><b>Preciosos 11Onze<\/b><\/a><b>. 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