Central Bank to auction Failed Bank Assets

Several weeks ago, the Central Bank published a report showing that it possessed roughly DR$100Billion in assets. It then issued a request to any party interested (national or international) for any bids to buy these assets. In today's DR1 News there is a follow up story showing that the Central Bank is getting ready to auction off some of these assets.

The proceeds of this sale will go to improve the "quasi-fiscal deficit".

The "quasi-fiscal deficit" is the interest payment of the Central Bank certificates, as a percentage of GDP.

Why does the the "quasi-fiscal deficit" need improving? Let's take a look at the total in Central Bank Certificate debt before PLD and now, in rough numbers:

1) Before Leonel: DR$75Billion
2) Today: DR$125Billion

What this means is that in 12 months , the Central Bank has leterally printed paper and recevied DR$50Billion in return. What happened to that DR$50Billion that the Central Bank collected? That missing money should be used to retire the certificates.

They money that the Central Bank collects from the sale of the assets is money that belongs to the poeple directly. Those proceeds should be re-imbursed to you...no questions asked!

What you have here is a clear and brazen case of those in power stealing over DR$50Billion.

What baffles me is that this is not front page news. Where is the analysis? Doesn't anyone else keep track of these massively important facts and figures?

Back to my Brugal and chocolate chip orange sherbert.

Let's assume your numbers are correct (I have not checked them)

If the government is paying DR$1.1Billion in interest on DR$125Billion in outstanding certificates.....how much would it pay if it only had DR$75Billion in outstanding certificates?

Is it better to owe a lot of money or is it better to owe a little money?

The DR gov't just "auctioned" US$150Million of assets. Surprise, surprise, the "winner" of the the auction (80%) was a bank DR bank (BNV) with strong ties (controlled?) to the DR gov't.

Anyone else smell a rat? The BNV controlled group paid about 60 cents on the dollar for the assets?

Also, the govt has claimed that the proceeds will go to reduce the Central Bank certificates? Any bets on this?

The assets that were sold consisted of a portion of the loan portfolios of the failed banks. I don't believe that real estate was included in this sale.

What struck me about this deal is that the government is essentially selling these loan portfolios to itself. The fact that they were sold at less than face value is reasonable to me also.