The Bottom Line / The Lesson of the Financial Crisis: Regulators, Intervene!

The new reality created by the global financial crisis has turned banks into organizations that require state-sponsored assistance to insure their survival in times of crisis.

That being the case, regulators now have far more power to prevent the deterioration of a bank. At stake is not the property of the bank's controlling shareholders, but the public's savings, which regulators are meant, first and foremost, to protect.

It's hard to miss the significance of the message that Roni Hizkiyahu and Stanley Fischer are sending to Shari Arison: They are of the opinion that Bank Hapoalim's decision making processes as led by Dan Dankner are poor, that some of the directors that Arison appointed are not fit for the job, and this situation cannot continue.

The banking system in Israel is generally in far better shape than that of the United States. Nevertheless, a lesson that Hizkiyahu and Fischer have learned from the global economic crisis is that aggressive intervention by regulators is needed to prevent the dangerous deterioration of a bank when signs of defective management start to accumulate.

Arison's mission is to do everything to raise the standard of bank board's decision making and conduct. Fischer and Hizkiyahu's message is: If you don't take care of it, we will.