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A parliamentary commission of inquiry formed on Wednesday may cause a constitutional crisis, as lawmakers seek expanded powers to force banks to reveal confidential information about customers.
The commission of inquiry, led by Knesset Economics Committee chairman Eitan Cabel (Zionist Union), is meant to look into how financial institutions decide to give credit to large businesses, after businessman Eliezer Fishman defaulted on billions of shekels of credit and was declared bankrupt.
However, the probe does not have subpoena power, neither for people nor for information; the only panel in the Knesset with such authority is the State Control Committee, and that is only for government employees.
Knesset House Committee chairman Yoav Kisch (Likud) vowed that he will change that with a vote on Monday, and will levy fines on those who refuse to comply.
The proposed amendment would be to a Basic Law, the legislation meant to form an eventual constitution, and requires a 61-MK majority, which should not be difficult to get because both opposition and coalition lawmakers back it.
Cabel expressed confidence that the amendment will pass, saying the commission of inquiry will not “go on its way with clipped wings, it won’t happen. We intend to do our jobs and bring honor to the Knesset and the Israeli public.”
Still, it may not be so simple to move forward with expanding the panel’s authority, despite broad support from MKs, because the Banking Ordinance requires that customers’ information be confidential.
All of the major financial regulators came out against Kisch’s bill, with representatives making personal appearances at his committee.
Israel Securities Authority chairman Prof. Shmulik Hauser said: “This bill can be destructive for publicly traded companies and for the entire market. Unlike banks and insurance companies, publicly traded companies don’t have to be public.
They can be private and find other sources of funding.
This bill will deter them; they won’t come [to Israel] in this way and will prefer to enter in darkness and not be transparent.”
Banking Regulator Hedva Bar said she will cooperate with the committee, but the bill endangers the market by exposing confidential information from the Securities Authority and the Department of Capital Markets, Insurance and Savings in the Finance Ministry.
The commissioner of capital markets, insurance and savings, Dalit Salinger, said that “if these companies will be under attack, Israeli citizens won’t have pensions.”
Bar added, “Israel’s financial stability was preserved during the world financial crisis [of 2008] because of our effective regulators, and we must protect them.”
The Israel Democracy Institute took the financial regulators’ side, for reasons of good governance.
The IDI’s Dr. Dana Blander said that giving the Knesset “judicial authority and putting criminal sanctions on private individuals by parliamentary commissions of inquiry violates the separation of powers and raises concerns about political revenge.”
In addition, Blander argued that the amendment could violate the right to privacy.