Economist Pedro Silverio, of the PUCMM university?s Cenantillas economic think tank, comments that now that the Central Bank has disclosed what it says has been happening for 14 years, it would be nice if the monetary authorities could review what has happened while they were sleeping, in reference to the Baninter financial scandal ? a crisis that escalated to colossal proportions in only eight months, after which it burst at the seams.
?While they slept ? a bank was paying interest rates way beyond the market rates, without rousing the dormant curiosity of the monetary authorities and regardless of the long-standing economic theory that states that higher interest rates reflect greater risks. The same bank used up its inter-banking credit lines and sought additional liquidity on the money table with suspicious frequency. None of that bothered the contemplative state of the supervisors and regulators.
?While they slept ? a bank was receiving advances and rediscounts for billions of pesos without raising any suspicions, and as if it were a temporary liquidity problem or one associated to a serious solvency problem. We do not know if the Monetary Board was asleep. But in case it did not have previous knowledge of the concession of advances and rediscounts, it could have found out about them in the reports of the Central Bank or newspaper articles.
?And while they slept? that bank, seeing that practically all its resources for survival were gone, had the genius idea of purchasing the Asociaci?n de Ahorros y Prestamos for motives that time has not allowed to be revealed — a sale that should have never occurred because of the nature of the loans and savings bank.
?And now that we are all awake, including the monetary authorities, it would be good that they grasp the opportunity to improve the credibility of our public institutions. One way of accomplishing this would be to have the judicial action now underway against the private parties complemented by an investigation, to determine the degree of responsibility or complicity, if there were any, of government officers whose mission was to prevent this nightmare from happening.?
For details on the Baninter presentation made by the Central Bank in Spanish, see
http://www.dr1.com/news/2003/052103_Baninter.ppt
(Power Point)
The English transcript of the press conference by Central Bank Governor Jos? Lois Malkum bringing the Baninter scandal into the open is available at
http://dr1.com/news/2003/051403_baninter.shtml