Via translation from Huky Guru’s Blog in Spain please consider statements by the president of the “FROB” regarding taxpayer support of the “bad bank”.

The president of the Fund for Orderly Bank Restructuring (FROB), Fernando Restoy, said  “resolution does not guarantee recovery of all public support”.

Restoy advocates “steps to minimize costs to the taxpayer”.

Restoy calculates pubic aid (so far) at 6% of GDP while Guru calculates Spanish Bank Bailout Funding at 22% of GDP.

Guru states the FROB croaked 26 billion euros in 2012 and 10 billion euros in 2011.

Guru complains, and rightfully so “Until recently they even sold us the idea that we were going to make money. Now the question we ask is whether we will recover anything.


Spanish taxpayers are again on the hook for more “support”. But why the announcement now? I can offer three possible reasons.

  1. A genuine recovery is underway, and officials believe they can finally admit the extent of the losses
  2. Officials mistakenly believe a recovery is underway and take this opportunity to disclose losses.
  3. Losses are so big and so obvious, that officials can no longer pretend there will not be additional losses.

My bet is on door number 3, or possibly a combination of door number 2 and door number 3.

Mike “Mish” Shedlock