Where Ireland differs from Spain—apart from the magnitude of the bust—lies in the peculiar institutions of Spanish banking. As mentioned earlier, with their international portfolios the big three Spanish banks are reasonably well hedged against domestic exposures. Where, then, did this volume of credit come from? The answer was the cajas de ahorros, the regional savings banks (think US credit unions), especially the conglomerate version, Bankia, that went bust in 2012. These institutions together made nearly 50 percent of all domestic banking-sector loans. The cajas matter because their loan books are opaque (think subprime); they are undercapitalized; and most importantly, they are stuffed full of assets that are not coming back any time soon, particularly because the assets in question were so mispriced to begin with.

Mark Blyth, Austerity, loc. 189