Out of the dozens of controlling leaders in the world, Hugo Chavez is perhaps one of the most fascinating. The Venezuelan president has a demeanor about himself that most of the world should be uneasy with, that is including those living in Venezuela...
On Sunday, the president warned all private banks in the South American country that he is not afraid to nationalize any bank that refuses to finance agricultural projects promoted by his government.
By law, Venezuelan banks are required to provide at least 10% of their lending to finance government development projects, like those focused primarily on agriculture.
Chavez says that many banks, even some of the country's largest, are not following the government's rules. Venezuela's biggest private banks, like Banesco, Banco Mercantil, and Banco Provincial -- which is run by Spain's Banco Bilbao Vizcaya Argentina -- all are accused of disobeying this law.
“The private banks that do not comply with the constitution and their duty, well, I do not have a problem nationalizing them,” Chavez said on his weekly radio and television program. “We must ensure the constitution and laws are complied with!”
From the AP,
Chavez singled out the president of Banesco, Juan Carlos Escotet, ordering him to lend more to Venezuela's cash-strapped farmers...
A bill approved last year by Chavez's allies in the National Assembly describes banking as a "public service" and gives the government the authority to declare banks to be of "public utility," which paves the way for state nationalizations.
To the applause of government officials and supporters Chavez proclaimed, “If you cannot do it, give me your bank!”
Seizing banks is nothing new to the Chavez regime. The government seized control of nearly a dozen banks in the past few years. The cause for seizure was that they were causing financial problems and violating banking rules.
The Chavez government controls 28% of Venezuela's banking sector. Many analysts say that some of these seizures were unjust and done to gain more control of the banking marketing within Venezuela; just another way Chavez is placing branches underneath government reign.
Chavez hails from the humble, rural countryside of the Barinas State and his agricultural initiatives of the past have been met with support from the farming community. But recently complaints of state expropriations and government-imposed price controls on basic foods have cut into their profits and farmers are angry.
To be able to still reign control but also not lose the support of his agricultural supporters, Chavez made a power move to threaten those banks who don't support the government's 10% of their lending law that the government will take control of the private bank. Some say the move is outlandish, as it is just another step towards massive state nationalization for Chavez and a way for the president to get precisely what he wants.
The IBVC is the major stock market index of Venezuela which tracks the performance of larges companies in the country. Last month the index rallied 5,297 points or 85.08% while still having one of the most successful years-to-date in it's history, reaching an all-time high just last month. We reported that Venezuela's YTD % change was the highest throughout the world's stock markets, at 79.24%, surprising many with it's number one ranking. But it was clearly noted that the inflation rate in Venezuela is a whopping 27%.
But don't worry, Chavez could just blame his country's high inflation on the United States, he enjoys blaming the States for just about everything else...
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