HUGO CHÁVEZ is using his powers to reform the financial sector.
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.
CARACAS: BANCO PROVINCIAL
The new law protects bank customers’ assets in the event of irregularities on the part of owners and stipulates that the Superintendent of Banking Institutions take into account the best interest of bank customers – and not only stockholders when making any decisions that affect a bank’s operations.
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.
HUGO CHÁVEZ is protecting the public from the predatory practices of bloodthirsty bankers. He has threatened to expropriate large banks in the past if they don’t increase loans to small-business owners and prospective home buyers, this time he is increasing the pressure publicly to show his concern for the lack of sufficient housing for VENEZUELA’s 28 million people. In fact, he issued this terse warning:
“Any bank that slips up, I’m going to expropriate it, whether it’s Banco Provincial, or Banesco or Banco Nacional de Crédito.”
In HUGO CHÁVEZ’s Venezuela the basic needs of ordinary working people take precedent over the profiteering of cutthroat banksters.