Draghi Watch: Italian MEP Challenges ECB Capo's Role in Monte dei Paschi Fiasco
February 19, 2013 • 11:42AM

"That's political, I'm declaring you out of order!" So ruled Chairwoman Sharon Bowles of the European Parliament Economic and Monetary Affairs Committee (ECON) as she jumped to defend European Central Bank President Mario Draghi at this afternoon's "Monetary Dialogue" with him in Brussels, after ECON member MEP Claudio Morganti (Italy), challenged Draghi on his complicity in the Monte dei Paschi di Siena (MPS) derivatives fiasco which played out when Draghi headed Bank of Italy.

This morning Executive Intelligence Review's Investigative Team had sent out to all ECON members a memo and the EIR feature on MPS outlining "Questions for Mario Draghi," focussed on how "Britannia Boy" Draghi, himself a derivatives expert, went from Goldman Sachs to the Bank of Italy. From there he did nothing as the London derivatives loan shark operations of JP Morgan and Deutsche Bank, with the assistance of Goldman Sachs, arranged losing-bet derivatives as part of financing Monte dei Paschi's purchase of the northern Italian deposit bank Antonveneta from Banco Santander over the period from late 2007 into early 2008. In follow-up calls to the offices several Members of the European Parliament before Draghi's afternoon appearance, aides promised to make sure the EIR memo and feature on the MPS fiasco got passed on and read.

In this afternoon's hearing, Morganti challenged Draghi on two simple points: Monte dei Paschi, even according to the advisor to Santander, didn't have the money to purchase Antonveneta from Santander, and thus, why didn't you stop the purchase? And, two, the price demanded by Santander was out of proportion with the price Santander had paid for the bank just weeks earlier, perhaps making this also an illicit transaction. (The "price" of MPS rose from EU6-plus billion to EU10 billion in the few weeks it was "owned" by Santander, just in selling it to MPS). Morganti emphasized that you Mr. Draghi were at Goldman Sachs when it was involved in the first sale of Antonveneta to Dutch bank ABN Amro, which was sold to RBS and Santander in early 2007.

An icy Draghi responded with the same defense he had used at the ECB monthly press conference in Frankfurt: The IMF and Bank of Italy have shown he acted "properly," and thus, he refused to answer the question on why he didn't use his power to stop a ruinous takeover. At that point MEP Morganti used his remaining allotted time to further force the issue, the Chairwoman produced an eclat, declaring Morganti out of order. By this evening, Corriere della Sera among several dailies, had already published stories of the confrontation in Brussels.

It is thought by some that Mario Draghi's deeds surrounding Antonveneta bank, from his the time he was at Goldman Sachs up to the October 2011 covert Bank of Italy emergency loan to Monte dei Paschi, were the key for his reliability, upon becoming head of the European Central Bank in November 2011, for running the ECB's still ongoing hyperinflationary bailout machine. We hope those days are numbered, so that the Glass-Steagall cleanout of a long-bankrupt system can start.

"But my questions were uncomfortable," Morganti explained in a press release, "so much so that I was blocked by the chairwoman of the Economic Committee when I tried to raise a third question on the Glass-Steagall Act on which I hoped that Draghi would tell me his view, because going back to separation between commercial and investment banks would be the only solution to prevent more scandals like the Monte dei Paschi one."