Bank of Italy Defends Draghi

By James Kwak

The Corriere della Sera, probably Italy’s most respected newspaper, relays a statement by the Banca d’Italia (Italy’s central bank) that its head, Mario Draghi, had “no role” in the Greece-Goldman Sachs interest rate swaps that have been reported by Der Spiegel and The New York Times. Here are some translated excerpts from the story:

“The transaction with Greece ‘was executed prior to the arrival of Draghi at Goldman Sachs,’ added sources from the [Banca d'Italia*], recalling that the governor [Draghi], who has headed the Banca d’Italia since the beginning of 2006, was vice president and managing director of Goldman Sachs in London from 2002 to 2005.

“On Tuesday, the former chief economist of the IMF, Simon Johnson, in his blog but picked up by other media, drew attention to Draghi, also calling into question the transaction by Italy, while [Draghi] was serving as director general of the [Italian] Treasury. . . . But it was in light of these possible connections, to avoid misunderstandings and rumors on the past role of Draghi, that the Banca d’Italia also chose to specify, on the subject of the Italian transactions in the 1990s, that ‘they had the goal of reducing the cost of the public debt and not to hide the true state of the public’s accounts.'”

The article is referring to this post by Simon asking whether Draghi had any connection to the Goldman-Greece or similar transactions with other governments.

* The actual text says “Istituto di via Nazionale.” The Banca d’Italia is located on the via Nazionale in Rome. This is similar to referring to the U.K. prime minister’s office as “Downing Street.”

5 responses to “Bank of Italy Defends Draghi

  1. Is it possible Draghi was at Goldman Sachs and NOT involved in unsavory, if not immoral or illegal, behavior. Unlikely.

    I still say that anyone who is ex-Goldman-Sachs is toxic and should remain viewed that way.

  2. So, if the sin was committed before Draghi came on board with Goldman, does that fully exonerate him? At a minimum, it seems he would be involved in keeping the secret. But I think he will be coming into other problems that will eclipse this issue (Could there have been a parallel phenomenon with Italy’s debt.)

  3. BTW, according to Zero Hedge, Italy is in much worst shape than Greece.

  4. dietrologia- Italian for, essentially, the things behind view that make things happen.

    “The wind blows over the surface of the lake
    In this way, the effects of the invisible
    are made visible.” – I Ching

  5. The Press Release of Draghi appointment at Goldman Sachs dates back to January 2002
    Goldman Sachs helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap. It is being reported that Greece’s debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002.
    Can anybody be more precise with dates?
    I am not sure that Corriere della Sera is Italy’s most respected newspaper…