Spain, EU to agree to $122.6B bank bailout

Spain and Europe were to agree to a $122.6 billion Spanish banking bailout Friday, officials said, as Spaniards protested austerity measures in 80 cities. The bailout memorandum of understanding, which includes an immediate $37 million bank rescue, follows Germany's approval Thursday of the arrangement, which includes 3 percent interest over 15 years and a 10-year grace period. The memorandum was to be finalized in a eurozone finance ministers conference call beginning at noon Spanish time (6 a.m. EDT), Spanish and European Union officials said. The bailout comes a day after Spain's lower house of Parliament enacted the largest austerity package since democracy was restored in Spain in 1978. The Congress of Deputies voted along party lines -- with the absolute-majority ruling conservative Popular Party prevailing -- to cut $80 billion from government budgets by 2015. Lawmakers promised later to address other parts of the austerity plan, such as speeding up moves to raise the retirement age to 67 from 65. Prime Minister Mariano Rajoy went to Parliament and then quickly left after casting his vote in favor of sales-tax increases to 21 percent and the government-spending cuts, including forcing government workers to take pay cuts of 3.5 percent to 7 percent and to forgo traditional Christmas bonuses. A Rajoy spokesman told the Spanish newspaper El Pais Rajoy left Parliament quickly because he was "busy working at his desk." The austerity vote prompted hundreds of thousands of Spaniards, led by public-sector workers, in more than 80 cities to march in the streets, protesting Rajoy's government. More than 100,000 protesters crowded Madrid's main Puerta del Sol square in temperatures above 105 degrees Fahrenheit, El Pais said. Organizers put the number at 800,000 participants, while police said the number was 25,000. Hundreds of thousands demonstrated in Barcelona, Bilbao, Palma, Pamplona, Seville, Valencia and other cities. Some protesters said they were especially enraged by what they regarded as a defamatory July 11 outburst by Member of Parliament Andrea Fabra Fernandez after Rajoy presented the $80 billion austerity package, including cuts in unemployment benefits. As she and other lawmakers applauded the cuts, Fabra shouted a phrase that means "They can go to hell" in the most vulgar terms. Fabra later insisted her insult was aimed not at the jobless but at Socialist lawmakers, who later asked for her resignation. Congress President Jesus Posada admonished Fabra "for behavior totally inappropriate" for a member of Parliament. She later said in a letter to colleagues she "made a mistake that I'm not proud of" and sought "the benevolence of the House" for forgiveness. Fabra is the daughter of Carlos Fabra, until recently the longstanding head of Castellon's provincial government in southeastern Spain. The elder Fabra, who stepped down Saturday as the head of the provincial branch of the Popular Party after running it for 22 years, is under judicial investigation in connection with several cases of corruption and tax evasion. He is the driving force behind the construction of a $183 million airport that has failed to attract a single scheduled flight. The airport -- which includes a 79-foot-tall, $375,000 statue to honor the elder Fabra -- has become a symbol of the wasteful spending that sunk Spain its current deep recession and banking crisis, The New York Times reported.