The Bank of Spain must act urgently, says Luis Garicano of the London School of Economics.
On Friday, the Bank of Spain revealed that 40% of them live in households with no income at all.
Frustrated by the slow pace, the Bank of Spain and the government have given them until year-end to complete their deals.
If banks have survived, it is thanks to the Bank of Spain's tight regulation and to the prudence of Spanish bankers.
What the economy really needs, says the Bank of Spain, is to rein in wage growth and make the labour market more flexible.
It has mechanisms to that end, and every quarter the Bank of Spain publishes each region's accounts, potential ammunition for its opposition parties.
The Bank of Spain has asked lenders to disclose quarterly details on exposure to property, including collateral, starting with their annual results for 2010.
The Bank of Spain now has a claim of 1000 euros on the Eurosystem of central banks (as a whole, not merely its Greek counterpart).
The draft memorandum requires the Bank of Spain to provide regular updates on ailing banks to the European Commission, the European Central Bank and the IMF.
The state of Banco CAM in particular has fuelled doubts about the credit quality of other lenders and hurt the Bank of Spain's reputation for tight supervision.
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All statistical information provided came from the Bank of Spain.
In a report last December the Bank of Spain reckoned that the country has a glut of 700, 000-1.1m unsold homes, which will continue to weigh on prices this year.
The memorandum requires Mr de Guindos to pass his sanctioning and licensing powers to the Bank of Spain, and Mr Rajoy to set up an independent fiscal body to monitor policy.
"Available data for the third quarter of the year suggest output continued to fall at a significant pace, in an environment in which financial tension remained at very high levels, " the Bank of Spain said in a monthly report.
SANTANDER, Spain March 22 (Reuters) - Santander's chairman said he saw no reason why chief executive Alfredo Saenz should have to give up his duties after the Bank of Spain began proceedings to decide if he would be barred from banking.
Well, the central bank, the Bank of Spain, has estimated - in its last Financial Stability Report - that Spanish banks are sitting on what it calls "troubled" property and construction loans of 184bn euros, equivalent to more than 17% of Spanish GDP.
Under Franco-era laws still in effect, Mr. Petrov, who has been accused of money laundering despite all transfers of funds being declared to the Bank of Spain and Agencia Estatal de Administracion Tributaria in utmost transparency, can be held without charges or bail for up to four years.
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As Martin Wolf of the FT pointed out this morning on Today, this German fear of becoming banker to the entire eurozone even infects the capacity of the European Central Bank to buy the debt of Italy and Spain in sufficient quantity to prevent their sovereign borrowing costs from ballooning to potentially lethal levels.
Santander said the total number of bank branches in Spain was expected to fall to 30, 000 by the end of 2015, down from 46, 000 in 2008.
Under this system, called Target2, one consequence of businesses and households taking their money out of the bank accounts of the deficit countries, such as Greece, Italy and Spain, is that the German central bank ends up lending vast sums to the central banks of those deficit countries.
Based on the recently published results of Spain's seven publicly listed banks, the investment bank Morgan Stanley calculates that lending in Spain is contracting at a damaging annual rate of around 8%.
Markets have gained ground in recent sessions on the view that the European Central Bank will step in with bond-buying purchases of hard-hit countries like Spain based on the outcome of the last central-bank meeting.
It was (and is), for example, a chronic failure of international bank regulation that the debt of Italy, Spain, Germany and so on was classified by financial regulators as completely safe and without risk after monetary union - which gave an unhealthy incentive to banks to lend to these governments (in the jargon, the government bonds of these countries were given a zero risk-weighting).
In the meantime, traders have looked to the central bank to ensure the cost of borrowing to Italy and Spain does not rise too high.
Gold rallied as Treasury yields fell to record lows, while over in Europe the prospects of a bank run in Spain spooked investors.
The jury heard millions of pounds were transferred from the UK to bank accounts in Spain.
It is that trend that has led the European Central Bank to expand its bond purchasing to the debt of Italy and Spain in recent months.
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So the expectation is that the central bank will buy government bonds of Spain and Italy.
At the same time, Spain is waiting for the final results of its bank stress tests.
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Second, the European Central Bank took action on Friday in advance of the shocking downgrades on Monday of Spain's banks by Moody's, by relaxing the criteria for the loans that it and Spain's central bank make to Spanish banks.
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