The proposal: "We propose to determine that any banking procedure, in respect to service or account management of a private customer, including management of credit limits in checking accounts of those customers, require the permission of the Knesset Economics Committee. For this purpose, private customer - a customer needing banking services for a household, a small business or a medium-size business."

Forty-five Knesset members voted in support of that sentence, which appeared toward the end of Likud member Moshe Kahlon's legislative proposal. Ostensibly Kahlon's main purpose was to delay the Bank of Israel's reform, that bans banks from letting customers exceed their credit limits from July 1. In practice, it was meant to render the Supervisor of Banks powerless.

If Kahlon's proposal had become law, the Knesset would have seized the supervisory powers over banks from the Bank of Israel.

That sentence, if enacted into law, would have de facto crushed the independence of the Supervisor of Banks, and rendered all the supervisor's professional decisions regarding almost all the banks' customers (households, and all but the biggest companies) subject to the Knesset's approval. Essentially that watchdog would have ceased to exist as an independent body.

One might be tempted to think that the Knesset members were too indolent to actually read the two pages of the bill ahead of voting. One might hope they'd missed that sentence, which actually appears twice. One might even be tempted to believe that maybe they read it, but didn't quite grasp its meaning.

Otherwise, it's hard to understand how more than a third of Israel's elected representatives supported a proposal that would have eliminated supervision over the banks, not to mention other watchdogs: because of the Supervisor of Banks, the most powerful watchdog of them all, loses its independence, that means all the others are sitting ducks.

It is hard to understand how these elected representatives voted for a proposal without examining its ramifications: loss of regulation over the financial markets, loss of market efficiency, a death-blow to Israel's reputation as an advanced, western country, and probably, injury to its sovereign credit rating.

Bibi's principles

It is even harder to understand how 45 Knesset members, led by opposition chairman Benjamin Netanyahu, voted for the bill. Netanyahu purports to be the white knight battling corruption in government, and the champion of transparency in the management of the state: how is this person prepared to sacrifice his most fundamental principles on the altar of butting heads with the coalition?

It turns out that two Knesset members saved Israel from slithering into the depths of third-world norms. Two Knesset members voted with the coalition against Kahlon's proposal, and it is by merit of their virtue that the proposal died. (By the way, until the last moment the coalition leaders had been cooperating with the bill's proponents.)

If the Knesset members wanted, they could have debated the proposal to regulate credit limits at the banks, ie overdrafts. They could have demanded explanations from the Bank of Israel governor, and tried to sway his opinion. They could have appealed in court against the Supervisor of Banks' decisions, if they deemed these decisions unreasonable.

But the Knesset cannot enact a law that simply gives it veto power over the Supervisor of Banks, turning the legislative arm into the operational arm. The Knesset wanted to make itself the Supervisor of Banks, and it should not.

Moshe Kahlon and Avigdor Yitzhaki: kindly present your credentials to serve as the new supervisors. Have you the training and background? You do not: all you have is a demand: "Every time the supervisor hands down a regulation that annoys the voters, come to me for permission". All you have is a ludicrous claim that since you are elected representatives, you can do as you please, and to hell with proper administration in the State of Israel.

Within a month, the Tel Aviv Stock Exchange lost 12.5%. That hurts: the blue-chips index fell from 900 points to 787, as of Wednesday's closing. The drops have been blamed on the foreign investors' crisis of confidence in emerging markets, the slide in Turkey and the renewed violence in the territories.

We do not agree: The TASE's problem is not Turkey, or even Gaza. Its real problem is the Knesset, whose members cannot be trusted to show responsibility and understanding. The Knesset, where even the coalition behaves like an opposition, supporting even the most insane of bills.