AFTER weeks of the familiar party bickering and public grandstanding the House of Representatives finally approved on Sunday night the bills that would make the foreclosures and insolvency laws more effective, cutting out the delays of the existing laws and paving the way for the sale of loans and electronic property auctions. The House also approved the state guarantees for Hellenic Bank which were a condition for its takeover of the healthy part of the operations of the Cooperative Central Bank (CCB).
As is so often the case, the votes were determined by the fear factor, which is a requirement for parties to back bills they consider unpopular. Without the fear factor of adverse consequences and pressure from outside, usually the European Commission or the ECB, the parties avoid decisions, sticking to the path of least resistance regardless of whether this prevarication harms the economy. This is why all unpopular measures are left to the last minute, the parties first exhausting all delaying tactics before giving their approval.
They do not all give their approval. In the case of the state guarantees for Hellenic Bank, the majority was secured through the votes of Disy, Diko, Edek and Elam, all of which justified their backing with the same argument. The country would have had to enter another assistance programme in order to cover the guaranteed deposits in the CCB, which amounted to €8.5 billion. There was a run on the bank last week caused by the uncertainty surrounding the takeover, but Akel, Solidarity, Greens and Alliance still refused to vote for the guarantees on the grounds that the deal was heavily weighted in favour of Hellenic. They were able to stick to their populist stand, without offering a plan B, because they knew other parties would act more responsibly.
As regards the five bills providing banks with tools to reduce their NPLs, Disy and Diko made an alliance and voted against all the amendments proposed during the plenum by the other parties. The amendments would have made the new legislation as ineffective as the existing laws, which were the main reason the banks have been unable to reduce NPLs and the reason the European Commission demanded that the legal framework was tightened. Again, the fear factor was at play, with the Commission having set this as a condition for approving the state’s support to the CCB, a few months ago. There was also the fear that the banks might have not passed the stress tests scheduled for later in the year, if there was not a marked reduction in NPLs.
Once again everything was left until the last minute with another crisis looming before it was addressed. And the government was also guilty of this behaviour, allowing the CCB’s problems to pile up, before taking action. Is prompt action too much to ask of government and parties in terms of the economic difficulties of recent years?
When decisions are left to the last minute, there is always the danger that situations veer out of our control.