MADRID | Former colleagues at the Bank of England will read with some sense of shock what William White told the Spanish financial newspaper Expansión during an interview with one of its editors, Miquel Roig.
Or perhaps not. After all, as Roig points out in today’s edition,
“‘Central bankers are a strong brotherhood of mutual admiration,’ former ECB president Jean Claude Trichet used to say. William White was the one who dared to break that code […] White challenged back then the undisputed Federal Reserve Chairman Alan Greenspan.”
White would warn that the Fed’s low rates were piling up imbalances and that inflation could give the wrong signals about an economic system under excessive stimulation. No one listened to him. White is now chair of the Economic and Review Committee at the OECD and an adviser to German Chancellor Angela Merkel and the G-20, and his words are better heard.
“‘Frankly, one of the things that surprises me the most about this crisis, especially in countries like the US and the UK, is the small number of executives of banks that have ended up in jail,’ he says without a hint of vehemence, but firmly, on a question of salaries and millions in bonuses for directors who have ruined their savings banks.
“In the 90s, after the Saving & Loans crisis in the US, thousands of people were imprisoned. This time it hasn’t happened.
“If someone is in charge of an institution that has failed in virtually all ways, the idea that you leave with a lot of money is inappropriate.”
About the Spanish financial system, White feels cautiously optimistic. In his opinion, BBVA and Santander will be able to digest their troubled assets using the profits of their business abroad. As for the smaller banks, he praised the reform of the sector while assuring that weaknesses will come to light sooner or later.
And unlike with the usual City talk in London, White regards Greece as a unique case:
“It is conceivable that some euro zone countries will have no other choice but to go for an orderly restructuring of its debt, but so far I prefer to say that Greece is an exception and we should expect the best case scenario to develop.”
“Austerity for all at the same time is not the solution to the crisis,” he added.