The Spanish government may remove a clause from its bailout fund for cash-strapped regions that gives it first claim on their revenue, according to two people familiar with the matter, Bloomberg reported. The move is intended to placate creditors who have told officials that the introduction of the regional bailout fund in July 2012 changed the terms of their bond holdings and gave them the right to call in the debts, one of the people said. Legislation may be approved as early as this month to clarify seniority, said the two people who asked not to be named because the talks are private.

Spain has been quietly tapping the country's richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds, raising questions about the fund's role as guarantor of future pension payouts, the Wall Street Journal reported today. At least 90 percent of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt, according to official figures, and the government has begun withdrawing cash for emergency payments.

Local governments across Spain, facing a steep drop in revenue and largely unable to borrow from banks or financial markets, have been paying suppliers of goods and services months behind schedule, the Wall Street Journal reported on Saturday. By the end of October, regional governments had accumulated bills in 2012 for providers, interest payments and other obligations totaling €13.7 billion ($18.1 billion), more than 1 percent of Spain's gross domestic product, a government report found.

Despite the economic gloom that has enshrouded it since the onset of the global financial crisis, Spain has at least one industrial bright spot: The country and its skilled, if underemployed, work force have once again become a beacon for European carmakers, the New York Times reported today.

Investors in Spain's embattled Bankia can take some comfort from the prior experience of shareholders at Ireland's largest retail bank, Allied Irish Banks, according to an Reuters analysis yesterday. Bankia now has a negative equity value of 4.2 billion euros ($5.6 billion), according to Spain's bank rescue vehicle. But the previous treatment of AIB's shareholders suggests Spain is likely to be successful in convincing the European Union to allow Bankia's existing shareholders to retain a tiny stake in the recapitalised, and newly valuable bank.

Spain's Banco Mare Nostrum and three other banks secured EU regulatory approval on Thursday for their restructuring plans which include cutting their balance sheets by between 25 to more than 40 percent over the next five years and halting dividend payments, Reuters reported. The European Commission imposed the measures in return for approving the bailouts of savings banks BMN, Caja Espana-Caja Duero, Caja 3 and Liberbank which were hit by the collapse of a long property boom in 2008.

Spanish house prices plummeted in the third quarter, a sign that the five-year-long property bust at the core of the country's economic crisis will continue to pose problems for the government, banks and households, The Wall Street Journal reported. In an indication that the market isn't yet bottoming out, Spanish housing prices are now falling at the fastest pace on record, after double-digit falls over the past year.

The European Central Bank's pledge to stand by vulnerable euro zone members will be enough to ensure Italy and Spain find buyers for their bonds at parallel auctions on Thursday, Reuters reported. In Italy, the ECB's bond-buying scheme is seen as a solid enough counterweight to the political tension and market jitters triggered by Prime Minister Mario Monti's weekend announcement of his intention to step down early.

The Spanish government said it won't make extra payments expected by more than five million retirees to adjust for this year's inflation, one of the toughest austerity steps yet in its struggle to slash a gaping budget deficit, The Wall Street Journal reported. The measure announced Friday means the government will withhold an estimated €3.86 billion ($5 billion) from older Spaniards, sending ripple effects throughout society. With more than one-quarter of the workforce unemployed, families rely increasingly on the retirement income of their elders to buttress household finances.

European Union regulators gave the green light to €37 billion ($47.9 billion) in euro-zone funding for Spain's stricken banking sector on Wednesday, setting in motion a long-term cleanup, The Wall Street Journal reported. In exchange, four nationalized banks agreed to make sharp cuts in their balance sheets and payrolls—a retrenchment that carries the risk of intensifying Spain's credit crunch in the midst of a deep recession.