Banks to pay $500,000 for 'expert' opinion on reforms
WASHINGTON - The Israeli banks are to pay $500,000 for the opinion of an American consultancy, which found against the Finance Ministry's proposal to force the banks to sell off their mutual and provident funds.
The fee for the commissioned consultancy was originally thought to be in the region of $200,000, but it is now clear that the sum is far higher. The charge is to be split between all members of the Banks Association, which includes all Israeli banks, according to their relative size. Bank Hapoalim, for example, as the largest bank, will end up paying $175,000 for the advice.
The banks hired four experts from a U.S. financial consultancy firm to review the government's proposal, which was one of the conclusions of the treasury's committee on banking reform, headed by treasury director-general Joseph Bachar. The four Americans hired by the banks were Eugene Ludwig, a former U.S. supervisor of national banks; Alan Blinder, a former vice chairman of the board of the Federal Reserve; Alfred Moses, a top Washington financial lawyer; and Elizabeth McCaul, a former banking superintendent for the state of New York.
During their visit to Israel, the four defended their independence and integrity. "We are not advisers who change their tune according to a fee," was one of their comments. Eventually, they found that the proposal to force the banks out of the mutual and provident fund sector - in which the banks currently dominate - was "draconian, poisonous, and will fail."
While visiting Israel last month, the four met with senior treasury officials, including Finance Minister Benjamin Netanyahu, who said after the meeting that he would not go back on the main recommendations of the Bachar panel.
The four experts are about to submit their draft report to the Banks Association; some members of the association are currently in Washington for the annual conference of the International Monetary Fund. After the banks have commented on the report, the final version will be sent to Netanyahu.