Tuesday, August 09, 2005

What on earth is he still doing there?

As prosecutors continue their inquiries in the Banca Antonveneta affair, the Financial Times has an interesting analysis comparing the present turmoil to the Calvi case.
As details emerge of how Antonio Fazio, governor of the Bank of Italy, sought to favour Banca Popolare Italiana, a small Italian bank, over Dutch lender ABN Amro in the takeover battle for Antonveneta, one past scandal comes readily to mind: the Banco Ambrosiano affair. This culminated with the body of Roberto Calvi, Ambrosiano's chairman, hanging from Blackfriars Bridge in London in 1982.
“The only thing missing so far is a corpse,” says one Milanese banker.
Among the similarities are an attempted takeover of the company that owns Corriere della Sera, Italy's most influential newspaper and a tough critic of the Bank of Italy's role in the affair; secret alliances among bankers, financiers and real estate moguls; links with the Vatican; mysterious off-shore bank accounts; and, of course, political scheming.
At the same time some of the most prestigious living economists that Italy has produced have called on Fazio to resign and for the functioning of the Bank of Italy to be drastically reformed, in an open letter published in Il Sole 24 Ore (Italy's main financial daily). They include Alberto Alesina, Luigi Zingales, Francesco Giavazzi, Marco Pagano and Luigi Spaventa and their petition (in Italian) has, for the moment, been signed by another 48 distinguished economists.
It is incredible that such a thing even needs to be discussed. Fazio's shameless refusal to resign, after having done irreparable damage to the reputation of the Bank of Italy and to the Italian economy as a whole, coupled with the government's wishy-washiness simply boggles the mind. I can only conclude that the Italian establishment is so insular that it does not realize the extent to which this scandal is seen by foreigners as further evidence that Italy simply cannot be taken seriously. And, frankly, I would be hard pressed to come up with a counter-argument to that conclusion. See here and here for background.

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