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Financial Unrest in Venezuela after Bank Seizures
December 4, 2009
by AQ OnlineThe Venezuelan government’s move to close four private banks plunged the price of the Bolivar and the country’s widely traded 2027 global bond as jittery investors pulled money out of the financial system to put it overseas. President Hugo Chávez tried to assure investors yesterday that his ultimate aim was to strengthen and improve the country’s financial system. "The government is putting out fire ... We are fixing the problem," he said. "We will all emerge stronger."
Chávez has nationalized key components of the economy, including oil, telecommunications and power, but he had mostly kept the banking system in private hands. However, shortly after announcing he had “no problem” nationalizing banks that broke the country’s laws and failed to lend to the poor, Chávez seized four private banks and liquidated two of them.
Although the banks hold less than six percent of the country’s deposits, more than 30 percent of these holdings have some relation to the government. The Venezuelan attorney general has barred 16 bank executives from leaving the country and their owner, Fernandez Barrueco, is now in prison facing a 10-year jail sentence.
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Apparently Venezuela is still
Apparently Venezuela is still far from having a democratic and fair internal policy. It's scarring me to see how easy the president "plays" with bank, I don't think he should have so much power. You cannot turn two banks into dust, let the financial experts do their job first. Chavez is controlling the money and thus he's controlling the entire nation. We won't see people benefiting from a cash advance loan anytime soon in Venezuela.
Banks are considered as
Banks are considered as lender. So if the government will move to close four banks, what will happen to those people who are planning to have a mortgage or whatever. I just hope that people will understand why the government is doing such thing.