European banks do not like the recapitalization plan proposed by the European Commission. They think a hypothetical default for a solvent country like Spain makes no sense.
So they will have to provision the assets that are considered most secure by EU legislatures, and that could leave the firms in a jam. They also consider see problems with elevating solvency requirements when in reality the main problems are rooted in liquidity shortages originated in the lack of confidence in management of policies associated with the euro.
Banks are not wrong to cast the blame on politicians for having made bad conditions worse. But now they will have to dig deep and balance their accounts, translating into credit shortages during that time.
