Chavez Threatens to Nationalize Venezuelan Banks
Monday, November 30, 2009 at 06:45AM 
CARACAS (Reuters) – Venezuelan President Hugo Chavez said on Sunday he could nationalize private banks unless they comply with the law, adding he had “no problem with that because the banks don’t want to extend credit to the poor.”
In a broadcast from nationalized farmland in central Venezuela, he said: “To all the country’s private bankers … (I’m saying) he who slips up loses; I’ll take over the bank, whatever its size.”
“You want me to nationalize the banks?” he said during the broadcast of his weekly TV show “Alo Presidente.”
“I have no problem with that because the banks don’t want to extend credit to the poor, they don’t comply, they don’t want to comply with the bank’s purpose for existence, and that is the law.”
Chavez said the purpose of banks was not to enrich a small group of people but “should be to collect funds and savings to help aid the country’s development by making loans, extending credits for housing.”
In power for a decade, Chavez has nationalized broad swathes of the economy.
Gee, does this sound like anyone we know?
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Reader Comments (13)
Well he sounds a lot like himself for certain. The difference between Chavez and Obama is that Obama is taking over businesses that are failing and giving them slush money to pay out huge bonuses to overpaid corporate scum. Chavez on the other hand takes over healthy businesses so he can control them and eventually ruin them. Chavez does not believe in term limits either. At least here the Government waited until the banks were failing and this was started by GWB. They are really not the same in that regard.
“I have no problem with that because the banks don’t want to extend credit to the poor, they don’t comply, they don’t want to comply with the bank’s purpose for existence, and that is the law.”
That's the same theme that Democrats came up with during the Carter administration. Banks are supposed to lend to the poor. That's why they created the CRA (Community Reinvestment Act). So the banks did what the Democrats said, and made risky loans to poor people who probably wouldn't be able to pay back the loan. The more they did it, the bigger the housing bubble got, which finally led to a global financial crisis.
The purpose of a bank is NOT to extend credit to the poor. The purpose of a bank is to make a profit. It's a business. Period. End of story. Whenever the government gets involved in business, all they do is screw things up.
Unless of course, there was a hidden agenda behind the action of the Carter Democrats to ultimately bring down the banks (so that they could be nationalized). In effect, Chavez is doing nothing different... he's just much more open about it.
The day will soon be here when we long for the moderation, wisdom and restraint of Jimmy Carter compared with the Saul Alinsky radicalism of Comrade Obama.
The purpose of a bank Hawkeye is to make a profit by lending money, not by speculating in the stock market. We have a similar problem here - banks stopped lending. The Bush/Obama response was to simply hand the banks billions of dollars, but they just salted the dough away, after buying up a competitor or two. What most independent economists have been saying for some time is that we should temporarily nationalize the major banks (which are bankrupt anyway), and forcibly cut them down to size and re-focus them on lending.
Lending to the poor is not the job of the banks and Chavez may be playing to his political base or he may not know what he's talking about. You may have also read about the fact that numerous bank execs in Venezuela have been arrested for misappropriating deposits for their personal use and diverting bank assets to their private businesses. If that happened in a US bank, I would expect the FDIC to close it down, wouldn't you?
Charles,
Could not agree with you more on that one.
Amy: it reminds me of George Bush, who nationalized 9 major banks in October, 2008...why do you forget history so soon??? Bias???
Timo,
I think I mentioned that already about this starting with GWB. Should have let these punks fail and the regional banks would have come to the fore.
that's possible, as people always need banks. Im not smart enough to know how bad the banking mess was and what would have happened if the govt didn't act...it could have been as smooth as you say with other banks stepping in or it could have been disastrous (job losses, credit issues, foreclosures, interest rates, small businesses not getting lending etc)...not sure. The point I was making is that both parties meddle in the private sector when necessary or when it suits them. This isn't an Obama invention. I see that. You see that. Amy doesn't see that.
I think the premise is that Republicans help business, business is good, and creates jobs so hence that is the right stance. Democrats help lazy whiners, lazy whiners bad, democrats bad. The thing about business is that it can be greedy, stupid, and evil. The whiners can be greedy, stupid, and evil. There is a lot of gray area, and everyone has their black and white issues. Businesses have enjoyed tax breaks for years from Republicans, and did it create jobs? Sometimes. Mostly these companies closed shop once the abatements ended and left for Mexico, and then China. Then these same Republicans turned around and claimed the Unions forced them to leave as they could not compete. It turns out $8.00 per hour was too much to pay. I think other than the abortion issue, it is awfully hard for Republicans to claim the high moral ground. As an Executive in fortune 500, 100, and 30 companies with an MBA I know what I speak of.
The irony of this is that if the U.S. government had temporarily nationalized these insolvent banks in the first place, cleaned up the balance sheets and re-sold smaller, less opaque banking institutions back to the private sector, we'd be in better shape than where we are today. Temporary nationalization was the correct way to go. Now you have even larger, insolvent, more opaque lending institutions attempting to "trade" their way out of the hole ala Japan in the 1990's. Oh and hoarding cash to build reserves at the same time.
"Whenever the government gets involved in business, all they do is screw things up."
That's only mostly true. The government got "involved" in the way the big banks in this country did business after most of them collapsed in the 1930's (again). We managed to stay clean of financial crisis for half a century. Then came financial de-regulation in the 80's and guess what happened?
W. Bush did start the bail out of banks. However, I do not think he would have continued it or tried to get involved in takeover near as much as Obama. by the way, then senator Obama voted to support the bailout. It is interesting to me that the congress holds the purse strings. When Bush was president and the congress approved of going into Iraq with force, banking bail out, etc, they could have stopped everything Bush wanted to do. If one looks at quotes of the democratic leadership they supported all of the actions at the time with large numbers.
Greta: I'm glad you at least acknowledge Bush did it too. I, for one, don't necessarily have a problem with saving the banks if it was as bad as I suspect...I think it could have caused a global collapse, not just a recession. These institutions were all playing the same game of hot potato except they all had bad debt that they had purchased. If these gian banks failed, thousands of other businesses who had loans, savings or credit with them could have failed too. This would have spread globally. I don't know this for sure but when you have both republicans (Bush) and democrats (Obama) agreeing for the most part on acting (bailing out) it must be serious.
Timo,
They would all agree that scotch is a good drink also. The fact remains that they picked some businesses to save and some to let fail. They could have handled it like the S&L crisis, but everyone wants the quick fix and zero blame.