The crisis has hit especially hard in La Vall D'Uixo, about an hour's drive north of the eastern city of Valencia.
Some of the town's residents have been denied access to investments that represent their life savings, while others have simply found their nest egg has become worthless because of the collapse of share prices. Up to 1,500 families in the town of 34,000 have been affected. They say they are victims of banks that sold them products that promised generous dividends, but have delivered financial ruin at the height of the crisis.
Vincente Porcar is fighting for 70,000 (about $90,000) that his 78-year-old mother, Francisca Molina, inherited when her husband died. Molina said that rather than offering something ultra-safe like a savings account or a certificate of deposit scheme, their local bank offered them preferred stock in the bank and made it seem like they had a fixed rate with no risk attached.
So, she signed up for them and watched the money grow.But there was a catch. "We wanted to buy a house and when we went to ask the bank for the money," Porcar said, "they told us we couldn't touch it." That's because while the preferred stock offered a high 7% return, they never expire; therefore, to get rid of them, there must be another buyer. Spain's dismal economy has sent the value of the shares plummeting, meaning there's nobody willing to take the shares off the townspeople's hands -- effectively leaving them in limbo. Not only that, banks faced with toxic loans and near-worthless property on their books, can no longer make good on their promise of high returns. The majority of those affected are small investors like Porcar's family, not bankers or hedge funds. Now, Spain's government is cracking down on the selling of financial products, but it won't guarantee that the nearly 1 million cash-strapped Spanish investors will get all their money back. On the other hand, the banks that sold them are the same ones that are benefiting from a 100 billion (about $130 billion) lifeline from the 17-nation eurozone.