On Wednesday, in an extraordinary sitting, the National Assembly passed a reform to the Bank Law which affirms that media owners and stock holders cannot manage banks. The law also slightly changed what institutions the law applies to so that the Sovereign People’s Bank (BPS) can be more accessible to communities. In a related matter, the National Assembly approved the nationalisation of an insurance company.
Previously, the BPS was regulated by its own internal rules; now it will come under Sudeban (the Superintendency of Banks and other Financial Institutions), will be incorporated into the National Financial System and will provide “socialised” banking where organised communities and individuals in communities can deposit, save, withdraw, and borrow from the bank, which will have “communal bank terminals” operated by locals.
The Chavez government founded the BPS in October 1999 as a bank that provided non-financial services such as training and micro financing to communities, small family companies and cooperatives, as part of a strategy to fight poverty.
Legislator Ricardo Sanguino said now the BPS would be able to cater to people who were previously excluded from the private banking system in what he called the “bankerisation” of the population.
The first “communal bank terminal,” in this case run by the National Bank of Venezuela, opened recently in the large barrio of La Vega in Caracas, and the government hopes to have them across the country by next year.
Members from the community can deposit up to BsF 1000 (US$ 232) at a time, and only other community members or organisations can withdraw, meaning that if members do not deposit or try to save, there will be little to withdraw.
Sanguino said it was a way to develop the communal economy of the barrio.
The bank will also provide very low interest loans (at below inflation rates) to communal councils, hopefully countering the bureaucracy that some communal councils have confronted when trying to get financial assistance from the government.
Legislator Ricardo Capella, said the reformed law and new status of BPS means that Venezuelans will be able to more directly manage their loans, rather than having to resort to third person loans with high interest rates. Such loans could be used to help the individuals or organised communities solve economic problems or start up productive initiatives.
Separation of Media and Financial Institutions
The other key change was a modification of article 12 of the law so that directors, share holders, and administrators of communication, information, or telecommunication companies are henceforth prohibited from holding such positions in banks, and vice versa.
The aim of the reform is to prevent bankers from using the media to hide or manipulate information for their own interests and against those of ordinary savers.
“The Bank Law… has been reformed in order to prevent what happened with the Federal Bank, whose owner [Nelson Mezerhane] was also a shareholder in the Globovision channel, through which he offered perks for his bank and attacked the competition. We want to avoid the savers being the new victims,” Sanguino said.
On 14 June the Superintendent of Banks took custody of the nation’s third largest bank, Banco Federal, after the bank failed to maintain minimum reserve levels and to meet legal quotas for productive sector investments.
Shortly after the intervention in Banco Federal by the government, Globovision “began a media campaign that sought to victimise the [bank] owners,” said legislator Mario Isea.
Isea explained that when information companies are controlled by bank owners, they can use deceptive offers to encourage citizens to deposit their savings in certain institutions.
Mezerhane fled the country soon after the government announced the takeover of the bank.
The National Assembly is also working on a new Law of Bank Activity and just recently passed the Stock Exchange Law, which decrees that stock brokers are not allowed to trade national public debt.
Insurance Company Expropriated
Yesterday the National Assembly also approved the forced expropriation of the insurance company Seguros la Previsora.
“Those who were running this company, what they did was generate losses, fraud, and embezzle resources obtained from the… different premiums and… hospital, surgery, maternity, possessions, and vehicle insurance,” Sanguino said.
He explained that for that reason, the state decided to intervene, and the National Assembly concluded that it could put the goods of the company and its affiliates to the service of the new National Socialist Network of Insurance and Mixed Social Assistance.
The Network aims to guarantee “fair access” to such services and create strategic alliances between them and other state organisations.Tags: Latin America
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This post was written by Tamara Pearson