Shai and Ehud were honored by uninvited guests yesterday. Shai and Ehud are used to bringing in guests, and not everybody is lucky enough to be received in their offices. Until yesterday, that is. Suddenly the unexpected guests broke in, identified themselves as Antitrust Authority investigators, and began searching files.
There is almost no need to introduce Shai and Ehud. They are, of course, Shai Talmon and Ehud Shapira, the deputy CEOs at Bank Hapoalim and Bank Leumi, respectively, who head the credit departments at the two major banks.
Between them, Shai and Ehud hold much more power than any other person in Israel. They decide who will get credit and who won't, who will get another loan payback extension, and whose home will be seized by the receivership court. If the banks are the oxygen of the state, then Shai and Ehud are its jugular vein.
Shai and Ehud cannot be suspected of not knowing how to use their allotted power. Precisely because of this, they merited the visit by the authority's investigators.
A few months ago, at the peak of the local authorities crisis, the Knesset passed a law to protect authorities in distress from creditors poised to foreclose on their funds. The goal of the law was to introduce recovery plans, under which the state would provide the local authorities with the funds necessary to pay salaries so that the money would reach their workers and not the creditors.
The banks, the principal creditors of the local authorities, had no love lost for the law. They saw it as interference with their sacred rights as creditors, so they decided to play hardball.
Shai and Ehud decided to completely cut off credit to the local authorities, including the stronger ones, whose debt repayment had never been in doubt and whom the law didn't even affect.
Shai and Ehud, together or separately, put a credit embargo on the authorities.
Because Shai and Ehud are the principal players supplying credit to the authorities, the embargo practically torpedoed their ability to implement their recovery plans.
The embargo, it should be noted, was effective. If Shai and Ehud wanted to send a message to the state not to mess with them, they succeeded.
Without credit, the authorities have no sustainability, and the state must back down and alter the law according to the banks' will.
In this manner, Shai and Ehud raised the forcefulness of the banks to new heights by managing to bring the state to its knees.
In this manner, Shai and Ehud personally are paying the price of the banks' concentration of power, of which they are a part. Were they two division managers of smaller banks, probably no one would bother asking them why they stopped extending credit to the local authorities. The banks had more than enough good reasons to make such a decision, considering the dilapidated state of the local authorities and the crass legislation, which altered the status of the authorities' creditors. The complaint that the banks coordinated the boycott and did not make a legitimate decision to suspend extension of credit, rests on particularly shaky legs.
But when you hold in your hands half of the local authorities' credit, and your colleague holds the other half, and you both cease to extend credit - the result looks rather bad from the outside. Bad enough to bring in investigators, even when it is not totally justified.
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