Populism has never been in short supply in Greece, especially at times of crisis, when politicians of all colors look for scapegoats. This is exactly the case today, with local banks playing the role of convenient scapegoats. There is no question that Greece has yet to feel the pinch of the global financial and economic crisis but politicians, the media and others sense it is coming. So, it is no surprise to anyone that they are positioning themselves to take advantage and reap political benefits, knowing that asking for sacrifices in return for medium- to long-term benefits will not go down well with the majority of Greeks. All of the above know that even if Greece is not not experiencing negative economic growth as it is today, as is the case in other eurozone economies, such as Germany and Italy, for example, a significant economic slowdown to the tune of 2 percent will be equivalent to a shock to a generation of Greeks who have not lived through or remember the last economic recession in the early 1990s. So someone has to be blamed. Since it is more difficult to convince the average person that the global economic crisis is responsible for all of his woes, it is more convenient for the government to find somebody else to blame it on. The country’s credit institutions have all that is needed to fit that role. They make billions of euros in profits and are unpopular with many citizens, who think the banks are out to squeeze them dry, either by charging high lending rates or limiting the sums of money they loan out. So, it is no surprise that politicians from all political parties have called on banks to lower their lending rates and, at the same time, provide ample funding to households and corporations while encouraging state companies to lend them money at high interest rates. In some cases, these are the same people who accused banks of bringing households to the point of bankruptcy by presumably lending them too much money a few months ago. Of course, this paradox does not surprise any student of Greek politics. There are other cases in Greek history where populism and irrationality have gone hand in hand. The fact that banks have raised interest rates on loans to better reflect their increased cost of funding as time-deposit interest rates and interbank rates have gone up, have made them even more unpopular. Banks are known to have paid 8 percent or more to state-controlled corporations, such as the state railways organization, for three-month deposits in excess of 200 million euros. They are also known to regularly pay annual interest rates of 5 percent or more for three-month time deposits of similar duration. At the same time, it is known that perhaps 30 percent or more of all Greek mortgages estimated at about 70 billion euros are based on the European Central Bank’s (ECB) refinancing rate plus a spread of 1 to 1.5 percentage points on average. These are loans that were given out from 2002 through 2007 and banks will certainly lose money now if they fund them at current time deposit or interbank interest rates. It should be noted that the refinancing rate of the ECB stands at 3.25 percent today and this means that some borrowers are paying an average rate of 4.25 to 4.50 percent on those mortgages when the cost of funding to banks may be higher. By all accounts, this sharp increase in the cost of funding justifies higher interest rates on new loans, while the scarcity of new funding entails tighter lending criteria and fewer loans. However, this logical explanation does not have many supporters at this point. In addition to government officials, banks have also become a favorite target of the opposition parties which are trying to capitalize on the banks’ low popularity for political advantage, with some on the left attempting to weaken them to the point of nationalizing them. It is as irresponsible stance as one can get at a time that Greece’s cost of sovereign borrowing has gone up as international investors demand greater compensation to buy government bonds from countries with a high public debt ratio and a large budget deficit as a percentage of gross domestic product. Those who espouse these ideas underestimate the consequences of undermining the banking system, which could collapse, pulling the whole economy into a severe chronic economic recession. In this case, the risk is that foreign investors, who are the primary buyers of Greek debt, may turn their backs on the local bonds issued to finance the budget deficit and strain the economy.