Greek Banks Feel Hostage to Debt Crisis

New York Times
June 21, 2011

A whiff of tear gas still lingered outside the downtown headquarters of Piraeus Bank last week, a souvenir of clashes between the police and demonstrators in front of the nearby Parliament building. It was a fitting metaphor for the way that Greek financial institutions have been trapped in the middle of their country’s turmoil.

Unlike their government, Greek banks were seen as well managed and prudent before the crisis. But they became victims of their government’s debt woes, severed from international lines of credit and able to borrow only from the European Central Bank.

Now the banks complain that the E.C.B. is pressuring them to reduce their dependence on central bank funding, hurting not only the banks but Greek businesses and consumers who are unable to get credit.

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