Cajas: Old fashioned rescues

Caja Castilla la Mancha is only a small bank. But the Bank of Spain’s rescue of this caja, or savings bank, has raised alarm bells – for good reason. The cajas, which are mutual banks controlled by regional politicians, have a bigger problem with bad debts in Spain than shareholder-owned counterparts such as Santander and BBVA. The cajas were more aggressive during the good times – loans to developers increased by more than 50% in 2006, and account for a fifth of their total loan books. This exp...