Venezuelan National Assembly Passes Law Making Banking a “Public Service”

[Peace Patriot]

Venezuelan National Assembly Passes Law Making Banking a “Public Service”

By Juan Reardon - venezuelanalysis.com 12/20/10

Barinas, 20th of December, 2010 (Venezuelanalysis.com) – Venezuela's National Assembly on Friday approved new legislation that defines banking as an industry “of public service,” requiring banks in Venezuela to contribute more to social programs, housing construction efforts, and other social needs while making government intervention easier when banks fail to comply with national priorities.

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The new law protects bank customers’ assets in the event of irregularities on the part of owners, makes it illegal to arbitrarily change banking hours, and stipulates that the Superintendent of Banking Institutions take into account the best interest of bank customers – and not only stockholders, as was the case prior to the new law – when making any decisions that affect a bank’s operations.

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"With this law we are restricting unregulated speculation... (Now) there is absolutely no chance that a banking institution becomes involved in irregularities, as they have done in the recent past,” said (Assembly legislator Ricardo) Sanguino.

In an attempt to control speculation, the law limits the amount of credit that can be made available to individuals or private entities by making 20% the maximum amount of capital a bank can have out as credit. The law also limits the formation of financial groups and prohibits banks from having an interest in brokerage firms and insurance companies.

The law also stipulates that 5% of pre-tax profits of all banks be dedicated solely to projects elaborated by communal councils. 10% of a bank´s capital must also be put into a fund to pay for wages and pensions in case of bankruptcy.

According to 2009 figures provided by Softline Consultores, 5% of pre-tax profits in Venezuela's banking industry last year would have meant an additional 314 million bolivars, or $73.1 million dollars, for social programs to attend the needs of Venezuela’s poor majority.

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http://venezuelanalysis.com/news/5880
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I'd love to see "New Deal" laws like this in the U.S. But with the Diebold Puke Congress, we're sure to see more looting, more speculation, more financial crime and more disgusting, unmitigated, irresponsible, destructive, bald-faced greed in the financial institutions that run our government.

[CJvR]

1. Seems as if...

...Chavez is determined to go into the sub-prime market.

[social_critic]

2. Venezuelan bonds do have a very healthy spread

They run 1000+ basis points above US bonds.

The Venezuelan government is not performing well when it comes to economic management - would you believe they subsidize gasoline prices so it's worth something like 5 cents per gallon? Subsidized gasoline so people can drive fat SUVs is so insane, one wonders where they got the idea.

But time will tell, one can assume eventually they'll have to devalue the currency, raise gasoline prices and start behaving more like they understand basic economics principles.

[CJvR]

5. Iran probably.

Although not even Amadjihadi & co could keep importing gas to bribe the masses indefinately.

[social_critic]

6. I doubt it

Subsidized prices are a historical practice in Venezuela, which has a very old oil industry. The problem is the subsidies have become a huge load on the government's cash flow, and if we look at who benefits - it's the guy with the big fat SUV who benefits the most. The practice they use is just non sense, and they ought to increase gasoline prices.

[Judi Lynn]

3. Fascinating. Will re-read this this evening. Wonderful ideas, looking out for the people, after all.

Where the #### would the banks be without them. My god. How far away from ethics these guys went, without oversight.

They need to be brought back to address the needs of the people they have pretended to serve all this time.

[social_critic]

8. No pretensions

Banks serve their stockholders' interests. They provide services to clients, who pay for these services. The new law is inefficient. If the government wants to increase its take of bankers' profits, it can increase taxes. I guess this is too complicated for many who don't get the idea that government has a function, private industry has a different function, and mixing the two tends to muddle up things. This is the reason why the Venezuelan economy isn't doing well, they don't get the basics.

[Judi Lynn]

4. Recommending.

:kick: :kick: :kick: :kick:

[Judi Lynn]

7. Kicking.

:kick: :kick: :kick: :kick: