Chavez threatens to nationalize Venezuelan banks

[Synicus Maximus]

Source: Reuters

Venezuelan President Hugo Chavez said on Sunday he could nationalize private banks unless they comply with the law, adding he had "no problem with that because the banks don't want to extend credit to the poor."



Read more: http://news.yahoo.com/s/nm/20091129/wl_nm/us_venezuela_banks_chavez_1

[Deja Q]

1. Half the time I have to wonder if he's sincere,

followed by the other half the time when I think he does it just to be a politicizing prick.

with good hair.

[cstanleytech]

40. Aye, I dont trust his motives often either especially

since he pushed so hard to abolish the law that limited the number of terms he could serve, in this case though I support him somewhat in regards to nationalizing "some" of the banks.

[EFerrari]

45. The same or similar measures lifting term limits are sweeping Latin America. n/t

[PDJane]

2. At least that way, the taxpayer has something

to show for all the cash......and it's been done before.

[Laelth]

3. I hate the idea of a dictator.

But we could use a Chavez here in the U.S.

:dem:

-Laelth

[bitchkitty]

6. No conflict there. He's not a dictator. n/t

[Lagomorph]

11. Oh Hell No.

It would NEVER work.

The only thing keeping the pogroms at bay in this country is the 2nd Amendment.

[24601]

51. Why a US dictator? And what happens when the one you get

isn't the one you want. Colonel-General, the Most Rev., President for Life Cheney for example.

Want to rethink your hypothesis?

[Sebastian Doyle]

4. I think Chavez is on to something here

we should do the same.

[ShortnFiery]

5. Whoa boy! Better ramp-up those classes at the SOA. Free Trade is threatened.

:evilgrin:

[UTUSN]

7. Well, of COURSE, he will !1 He ALWAYS has a good REASON !1 n/t

[Joanne98]

8. YAY

[RedCloud]

9. Amazing how those who call him socialist overlook things like this!

Why hasn't he nationalized the banks? DUH! Book one, page one of elementary socialism.

Our "buddy" Carlos Andrés Pérez nationalized the oil companies in 1976, or did he?

[EFerrari]

13. That's an interesting point. Why didn't he do it earlier?

And, he calls himself a socialist but the economy is mixed.

[WriteDown]

10. Here's what I don't get.....

Why not just START a brand new national bank that is required to lend to the poor. Why nationalize existing banks?

[Garam_Masala]

25. Good idea...like a Public Option Bank! .. eom

[WriteDown]

38. Exact;ly! nt

[Selatius]

12. In Venezuela, just 10 banks control a whopping 70% of total funds. They need to be smashed.

There ought to be powerful anti-trust laws on the books down there to prevent that kind of consolidation.

[WriteDown]

15. If they're nationalized then only 1 will own 100% of the funds..

Not much better an option.

[ozone_man]

19. Might not be able to charge usury rates.

Or deal in unregulated derivatives like in the U.S., where the taxpayers have to bail them out when things go awry. What a shame that would be.

[WriteDown]

36. Sounds like a National bank would be the way to go then...

rather than nationalizing the existing banks.

[Selatius]

28. Kind of a straw man argument. The article itself states Chavez has hardly done that.

At least as far as the banking sector goes. The vast majority of banks in Venezuela are still privately controlled.

[WriteDown]

37. No argument to be made of straw...

I was speaking of IF nationalization were to occur.

[Incitatus]

48. x

[dotymed]

18. Chavez

is definitely not a dictator. He does implement many policies to help the poor and working poor. That is why he is such a popular president. It disgusts me to read all of these anti-Chavez posts from so called progressives. He is trying to level the playing field between the extremely wealthy and the peasants. I believe in what he is doing. If we had a President who would do the same things. our country could get out of this corporofascist control and start being a government for the people. Viva Chavez!

[bossy22]

20. he may not be a dictator

but he sure does have a problem with dissent. Any leader, no matter what his policies are, loses my support when they try to impede free speech or crack down on dissent

[EFerrari]

22. Except that hasn't happened.

That's a meme his opponents and enemies have worked to good effect.

[laughingliberal]

21. +1 nt

[thegoodfight]

26. Good point

Its amazing how many progressives are against him, when he is making real changes, positive ones, in Venezuala and trying to bridge the gap between the poor and the rich. I like way he goes about things, its different, he's very hardline and doesn't take shit from anyone. Something I'm yet to see in other politicians, good for him.

[Garam_Masala]

27. yap...all people should receive the same exact salary

regardless of how hard they work or what they produce.
Human beings deserve to be equal to every other human being.
Not good justice to have winners and losers in life's lottery.

[Vidar]

14. How novel : government owning the banks instead of banks owning the government!

[EFerrari]

16. Good one, Vidar.

lol

[laughingliberal]

17. From the article:

<snip> Venezuela's banking sector is dominated by 10 banks that control 70 percent of the total funds.
Chavez said he ordered the nation's chief prosecutor to investigate why a state bank, Banfoandes, deposited "a giant amount of resources in private banks."
"How is it that state resources, which belong to the people ... end up being placed in private banks?" he asked in his broadcast. <snip>


http://news.yahoo.com/s/nm/20091129/wl_nm/us_venezuela_banks_chavez_1

A state bank deposited a giant amount of resources in private banks? Well, heck, in the USA that's just good bidness.

[Mudoria]

23. Maybe he should worry more about the runaway inflation

and his falling popularity than nationalizing the banks. He seems to have done a piss poor job running an economy so far and I doubt he has any more expertise in the banking business. Maybe he could bring on someone with actual capabilities to run the country and he could stick to what he does best: pontificating on TV.

[EFerrari]

29. Chavez has a 62% approval rating.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=405&topic_id=26784&mesg_id=26784

And his ability to bring talent on board is in no small part why.

[boppers]

30. We have some bankers here they could hire....

It surprises me that so much money is in private banks there, it will be *very* interesting to see what happens in the next few days because of these remarks.

[harmonicon]

35. how does the rest of the world fair in your imaginative dream world?

The Venezuelan economy has boomed under Chavez. Try again.

[classysassy]

24. The lawless banksters

are in deep doo doo,Hugo the sheriff is hot on their trail.

[dipsydoodle]

31. Good.

.

[pipoman]

32. It's not the answer..indebting people who can't

reasonably pay back the debt and pay their regular living expenses too, that is. Our banks are in the trouble they are in mainly because of right wing bank deregulation and left wing lowering of lending standards.

[EFerrari]

33. Small businesses depend upon credit for start up and to make their payroll

consistently.

[pipoman]

34. Small business doesn't = "the poor"

[EFerrari]

39. That would depend. But, I did go back and reread the article

and also checked venezuelanalysis to see if we could get a better fix on what kinds of credit he's talking about. There is a mention about financing housing.

At Venezualanalysis, I found one article that ran down the takeover of four small but linked banks that couldn't account for a large influx of capital. The owner was arrested and that interesting because he is a high profile supporter of the government.

And also found this discription of a market built for street vendors:

Venezuelan Street Vendors Benefit From New Market Building
November 13th 2008, by Tamara Pearson - Venezuelanalysis.com
November 13, 2008 (venezuelanalysis.com)-- Over 1,200 street vendors will start operating in the market of Quinta Crespo in Caracas, which was inaugurated by the city mayor Freddy Bernal and the minister for the communal economy, Pedro Morejón, on Tuesday.

The building is part of the solution that the local and national government are offering to the problem of the large numbers of street vendors throughout Caracas and the country.

“A problem as complex as the informal economy has a socialist orientation as its solution…women and men who were roaming the streets for 10, 20 and 30 years now have a dignified place,” Bernal said at the inauguration.

http://www.venezuelanalysis.com/newsbrief/3949

But, that didn't really clarify who Chavez is referring to. Maybe a transcript in Spanish or more details will surface.

[pipoman]

43. The only frame of reference I have is the US economy

I blame the US housing bubble largely on lowering of lending standards which was government mandated during the Clinton years. While the intent may have been noble, the result was disastrous on several levels. For decades maximum lending levels based on debt to income ratios and maximum lending percentage based on real estate values kept existing home prices in check with building costs. The lowering of lending standards resulted in an upset of this balance.

When I was in the real estate business in the 1980's, the lending standards were pretty well fixed. To buy a home a person's debt, including housing could not exceed 30-35%. The norm was a mortgage seldom exceeded 80% of the appraised value or asking price, which ever was lower and the 20% down couldn't be borrowed, it had to be earned income. If someone was steller, they may be able to get 90% financing...it was fairly rare. In the midst of the housing bubble there was a series on HGTV which followed young, first time home buyers from shopping through closing on their first home. Nearly every episode featured a young person or couple with an entry level job who was driving a new car. At closing the buyer (in every episode) would get an 80% first mortgage, a 20% 2nd mortgage based on the higher of the appraised or sale price, and pay interest only for the 1st 5 years. The buyer would usually walk away from the closing with a check which they usually used to furnish the house with new furniture. They were buying expensive homes $300k+, not starter homes. Previously to buy a 300k home the buyer would have had to save up $60k plus closing costs and had an income of at least $7k per mo with no other debt. Even if they had the income, they rarely could save up 60k, so they would opt for a less expensive starter home for a few years, build equity through payments and appreciation, then buy a nicer home with the equity. The lowering of standards changed the dynamic of real estate in this country resulting in too high of demand pushed by people who had no business buying the level of homes they were.

As a caveat I believe that Reagan/Bush bank deregulation combined with low lending standards resulted in the overall banking crisis we are seeing today. The train wreck was visible to most economists and the government...the ostrich effect kept anyone from addressing the problem before the collapse.

Now I don't know if the Venezuelan plan would mirror the US model, but this was the basis of my first post.

[EFerrari]

44. Yep. We did real estate too, commercial and residential, from the 80s

to now. And preferred commercial because residential became insame.

[Synicus Maximus]

49. Your post is defective. It does not blame the banks and lenders.

You forget that the problem was that people were forced to buy more house than they could afford. They were told that they could afford a $400000 house on a $50000 income and believed it. So it wasn't their fault. They believed want they were told. Without having to worry about thinking about it.

[ChangoLoa]

41. Chavez is attacking the chavista banking mafia

Don't read this as a simple nationalization. It's way more complicated.

Banco Canarias, Banco Confederado, Banco Provivienda, Bolivar Banco are in the center of the government's financial network. Their owners are closely linked with top government officials. They deal with the government's petro-bonds and change controls.

Pedro Torres Ciliberto (José Vicente Rangel, former Vice-President)
Ricardo Fernández (Adam Chavez, Governor of Barinas state and Chavez's elder brother)
Rafael Sarria (Diosdado Cabello, Minister of Public Works)
Morris Veracha (Rafael Isea, Governor of Aragua)
Arné Chacón (Jesse Chacón, Minister of Science and Technology)

Chavez said he ordered the nation's chief prosecutor to investigate why a state bank, Banfoandes, deposited "a giant amount of resources in private banks."

"How is it that state resources, which belong to the people ... end up being placed in private banks?" he asked in his broadcast. "This is counterrevolutionary."

-1 for letting these corrupted mafias steal the money of the state for the last 7 years.
+1 for him on punishing them, it's never too late..

[Zorra]

42. I'd love to see that happen - and what the result of this action would be.

:popcorn:

[JackRiddler]

46. Why didn't the US nationalize the banks last year?

[ozone_man]

47. That's the $64,000 question...

perhaps $64 trillion now a days. To bail out the share holders and give credibility to the illusion that our failed banking system is viable. And of course paying dues to Obama's largest corporate contributors on Wall Street.

I think Paul Krugman said that they should be nationalized and split up, making them no longer too big to fail. Once in while he is spot on.

[yurbud]

50. can he nationalize ours too? Half the shit they say about Chavez I wish was true here

[Bo]

52. 4 banks closed today causing wide spread panic

2 are being liquidated

[EFerrari]

53. Do you have a link for this panic?

[WriteDown]

54. Maybe this is it...

http://www.reuters.com/article/bondsNews/idUSN3044036120091130

[dipsydoodle]

55. Prolly depends on who's doin' the reporting

BBC don't mention any panic : http://news.bbc.co.uk/1/hi/business/8388289.stm

:hi:

[EFerrari]

56. Thanks.

:hi:

[ChangoLoa]

57. Depositors of intervened banks will be paid USD 697.76 million

Liquidation of BanPro and Banco Canarias: clients with deposits under 4,651 $ will get their money back within the next 21 working days.

Bolivar Banco and Confederado still waiting for a decision

Article:
After the Venezuelan financial authorities had operational control and complete access to statistics and confidential information in banks Canarias, Banpro, Confederado and Bolívar for one week, on Monday they decided to close down their doors. In other words, the banks offices and branches will not provide any service and the customers will not be able to withdraw or transfer money.

The government decided to sell off Banco Canarias and Banco Provivienda (Banpro) after their intervention, while Bolívar Banco and Confederado will temporarily shut their doors while state administrators try to fix them.

The decision to liquidate Banco Canarias and Banpro means that the State guarantees to depositors up to VEB 10,000 (USD 4,651). The Bank Deposit Guarantee and Protection Fund (Fogade) will pay the depositors within the next 21 working days.

Humberto Ortega, Fogade's president, says that the government-run bank insurance fund has a net worth over USD 2.9 billion. He added that in order to pay some 750,000 depositors affected depositors the fund needs to disburse some VEB 1.5 billion (USD 697.76 million).

"With these funds we will be able to meet our commitments promptly. The depositors should not be concerned because the fund has enough resources to face this financial situation," said Humberto Ortega.

Studies show that a total of 268,000 clients of Banco Canarias, representing 92 percent of depositors, have less than VEB 10,000 (USD 4,651) in the bank; that is, they will get all their money back when Fogade pays the insurance money.

In the case of Banpro, 97 percent of depositors (457,000 people) will get all their money back.

The few people with more than USD 4,651 in the bank will have to wait until Fogade liquidates the assets and pay the debts to creditors in accordance with the priorities set in the General Law on Banks and other Financial Institution.

The financial authorities say that the decision to sell off Banco Canarias and Banpro is based on the fact that at the end of November 27, the two banks showed a "mismatch between assets realizable and liabilities," as well as "the existence of huge certificates of deposits at intervened banks."

Alí Rodríguez, the Minister of Economy and Finance, said that "the intervention shows that the damage caused has been so great that it has severely undermined the solvency of these institutions. This has forced (financial authorities) to shut their doors and liquidate them."

In the case of Bolívar Banco and Confederado, the economic officials believe they may recover both financial institutions, and depositors will have their money when they are refloated or sold.

Bolívar Banco, Banpro, Confederado and Banco Canarias, the four financial institutions purchased by businessman Ricardo Fernández Barrueco wove a web of fraudulent operations, along with brokerage firm U21 Casa de Bolsa.


Link
http://english.eluniversal.com/2009/12/01/en_eco_art_depositors-of-interv_01A3137053.shtml