Fobaproa
Fobaproa (Fondo Bancario de Protección al Ahorro; "Savings Protection Banking Fund", in
In the years following the peso crisis, Fobaproa and its resulting debt has become a subject of controversy in Mexican politics. Beneficiaries of the fund were companies favored by the country's political leadership and were implicated in a number of corruption cases.[1] The management of the Fobaproa funds drew significant criticism by Mexico's then two main opposition parties, the Party of the Democratic Revolution and the National Action Party, where it represented a prominent issue during the 2000 Mexican general election.[2]
Background
In 1982, at the end of the presidency of
Creation of the fund
In 1990, in an attempt to prevent situations similar to those of the previous two administrations, the government of Carlos Salinas de Gortari instituted the Fobaproa, a contingency fund for extraordinary financial problems. The Fobaproa would assume outstanding debt and would capitalize banks in the advent of economic crises that would present liquidity problems for these institutions. The following year hundreds of companies the government owned were privatized, in an attempt to reduce government expenses and to liberalize the economy. Eighteen banks were sold at 37.8 billion pesos for a total of 61.6 billion pesos for all 409 companies.
1994 economic crisis
In December 1994 during the government of
The Fobaproa assumed debt for 552 billion pesos. Not applying the Fobaproa would have likely caused an interruption of credit and withdrawal from saving accounts for millions of families and thousands of companies. In January 1995 the Procapte (Programa de Capitalización Temporal (Procapte) or "Temporary capitalization program") was created while the Fobaproa was assuming outstanding debt to banks. The Procapte allowed faster access to a higher volume of foreign capital and the solvency of banks. A condition for Fobaproa to assume the debt was that stockholders of these financial institutions would re-invest their capital.
In 1996 the Ucabe (Unidad Coordinadora para el Acuerdo Bancario Empresarial (Ucabe) or "Coordinating unit for the Bank-Entrepreneur Agreement") was created so that debt could be re-structured through it. 54 companies took advantage of the Ucabe to re-structure 9.7 billion dollars and avoid defaults.
Preventive measures
In March 1998, the Zedillo cabinet presented to the
Executive and Legislative Branch agreements
In September 1998, the government of Ernesto Zedillo and the groups of the PAN, PRD, PRI, PT and PVEM in Congress agreed on establishing a framework of agreements to approve the presidential initiatives. The agreements contemplated the creation of supervision mechanisms to oversee credit activities, to study the legality of financial operations associated with the Fobaproa, to establish legal frameworks to prevent new financial crises, to punish those who illegally benefited from or permitted unlawful operations and to support small and medium-sized entrepreneurs and a more equitable distribution of the costs of the Fobaproa.
Controversies and political response
The last initiative was to convert to
PRD
The
PAN
On August 20 of the same year the National Action Party ("Partido Acción Nacional" or PAN) published the document Propuestas de solución integral a la crisis bancaria ("Proposals for an integral solution to the banking crisis") and declared that not only external factors were involved in the economic crisis but also the inefficiency and corruption in the administration of banks. One of the proposals was the creation of a Instituto para el Seguro de Depósitos Bancarios ("Institute for the Insurance of Bank Deposits") supervised by Congress and to protect funds of saving-holders.[2]
PRI
A week later, on August 28 the Institutional Revolutionary Party ("Partido Revolucionario Institucional" or PRI) proposed the reduction of 30% of the debt assumed by the Fobaproa and that banks assumed the risk they had agreed to when the debt was acquired by the government: 45% for mortgage loans and 60% for fishing and agricultural groups. They also demanded denying bail to white collar employees involved with corruption and a stricter supervision of banks.
References
- OCLC 924299167.
- ^ a b Alonso, Jorge (2000). "Las elecciones federales del 2000, consolidación del panismo" (PDF). Espiral. 7 (19). Guadalajara: Universidad de Guadalajara: 95–126 – via Redalyc.
- ISSN 1134-6582. Retrieved 2022-04-23.
- ^ Hernández, Luis Guillermo (8 June 2000). "Difunde PRD lista de 747 nombres en el Fobaproa". vLex (in Spanish). Retrieved 2022-04-23.
External links
- (in Spanish) Fobaproa: Paso a paso ("Fobaproa: Step by step"), part II and part III at the Chamber of Deputies of Mexicosite
- (in Spanish) Aspectos legales y económicos del rescate bancario en México ("Legal and economic aspects of the banking rescue in Mexico")
- (in Spanish) IPAB Instituto para la Protección al Ahorro Bancario (Bank Savings Protection Institute) Mexico's deposit insurance agency
- The Mexican Economy at the Banco de Méxicosite
- (in Spanish) Si nadie entiende, paguen ahora ("If nobody understands, then pay now"), article by Carlos Monsiváis
- (in Spanish) Black list at El Barzón's site
- (in Spanish) Expediente Fobaproa ("The Fobaproa file") at La Jornada
- (in Spanish) Fobaproa–IPAB
- (in Spanish) El rescate bancario salvó al país ("The banking rescue saved the country"), article on todito.com