This chapter analyzes the Spanish financial crisis (2009-12) and the process of financial reform that followed it, from a political economy perspective. Risk mismanagement in the saving banks was the crisis’s main culprit, but we argue that its intensity was mainly due to the ‘power of inaction’ of the big Spanish banks. Ultimately, when the Spanish financial system threatened the sustainability of the euro, European institutions intervened and forced the implementation of the necessary reforms. The chapter sheds new light on the Spanish case by analyzing the political and economic factors that led to the crisis and how it was resolved.