HOMEMASS MEDIAXavier in the NewsSpanish Banks Resist Idea of ‘Bad Bank’ Bailout
06 May 2012
Spanish Banks Resist Idea of ‘Bad Bank’ Bailout
Mass media - News Sala i Martín
The New York Times

MADRID — As investors raise the pressure on Spain to clean up its banking sector, some of the largest and healthiest financial institutions in the country are fretting over the impact that a bailout would have on their own valuations [...] Such mergers, however, “don’t remove the holes but simply pass them on from one institution to another,” Xavier Sala-i-Martín, an economics professor at Columbia University in New York, wrote recently on his blog. “The only thing that will work is fresh money, to recapitalize some banks that have no capital left, and since it’s clear that banks cannot raise sufficient private capital, that means there are only two solutions: bankruptcy or public money,” he added [...]

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