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On June 17, 1998 accountant Yaakov Hadoumi sent a short letter to then Banking Supervisor Ze'ev Abeles, in which he argued against the appointment of Moshe Liebowitz as CEO of Trade Bank because of serious criticism of him at Bank Hapoalim.

Abeles received the letter shortly before the end of his term in office and passed it on to (incoming) Yitzhak Tal. Nothing was done, Liebowitz got the job ... and now, the rest is history.

The phenomenal complacency of the banking supervisor's office and its overweening self-confidence has moved the Bank of Israel to come out with varying stories even on such a matter as its opinion on the proposed appointment of Ra'anan Cohen MK as chairman of the Industrial Development Bank of Israel.

The central bank's first response was that it did not approve the appointment. But as soon as Cohen upped the pressure the Bank of Israel changed its spin and said, actually, the appointment does not require the bank's approval. Wonderful - problem solved. The supervisor has no opinion, he's a veritable UN.

It just happened that Cohen's appointment didn't work out anyway following Prime Minister Ariel Sharon's intervention. If Binyamin Ben Eliezer and Dalia Itzik can solve their problems by appointing Cohen to the Industrial Bank job, why can't Sharon do the same with his old Likud crony Shimon Katzenelson, the deputy Ashdod mayor - as if Sharon has no need of central party votes.

This grotesque argument between Ben Eliezer and Sharon suggests one conclusion - the Industrial Development Bank should commit suicide forthwith, because nothing good can come of its life. This bank has outlived its era. It fell into loss in 2001 and is currently devoid of general commercial activity because its capital risk ratio is below the required minimum.

Former CEO Shlomo Borochov was a political appointee of then government minister Natan Sharansky. He knew nothing of banking, yet despite the financial decline of the bank, he demanded 850 percent excess compensation (NIS 2.5 million). Why? Because chutzpah knows no bounds.

Neither do Katzenelson or Cohen know anything about banking but, hey, who's going to care on a monthly salary of NIS 50,000 - not including expenses, secretary, office, car, travel abroad and other perks?

When former central bank governor Michael Bruno decided he should act according to the findings of the Beijsky Committee [into banking share manipulation], he quickly used the clause that allowed him to threaten Rafael Recanati with a three month suspension. That did the trick and Recanati resigned. Even then, there were some that claimed the governor had no authority, but Bruno did not dodge the bullet.

So do governor David Klein and Banking Supervisor Yitzhak Tal truly believe that with all the laws, regulations and instructions, allied to the Bank of Israel's governance of the banking system, they have no way of preventing an unsuitable appointment to a senior banking post?

If so, and if Klein wants a change of law first - and only then can it begin to work - then we really do need to prepare ourselves for another round of crises and crashes.