Former governor of the Central Bank and ambassador to Washington, economist Bernardo Vega writes in El Caribe today on the many violations to the Monetary & Financial Law the authorities have committed in dealing with the
\nBaninter banking crisis. Among these is the fact that the government chose, instead of dissolving the bank, to apply the Asset Laundry Law for reasons best described as political. The plan was to prevent the national media giant, under the ownership
\nof former Baninter president, Ramon B?ez Figueroa, from waging a campaign against the actions of the Central Bank. This route, however, also would forestall the liquidation of the assets until a ruling from the judiciary.
\nAnother violation was the decision to honor all deposits. The Monetary Law establishes a ceiling of RD$500,000 per depositor and 30% of the total deposits of the bank, with the idea being to defend the middle class and the poor. The decision to honor
\ndeposits without limit was financial and political. With Baninter funds concentrated by small numbers of depositors with vast political influence, any attempt not to recover their funds could have created electoral problems, he writes.
\n?The bailout converted a private debt into a public one, affecting the national budget, both for the high interests rates the Central Bank has to pay, as well as for the need to honor removals of the funds,? explains Vega.
\nVega says that the depositors of large sums, including foreigners, knew the risk they were taking when placing their money in a bank that paid higher interest rates than others. Thanks to the government, these have ultimately been the winners at the
\nexpense of the Dominican middle class and the poor, who are paying the price in the form of high inflation, new taxes and less social services.<\/p>\n","protected":false},"excerpt":{"rendered":"
Former governor of the Central Bank and ambassador to Washington, economist Bernardo Vega writes in El Caribe today on the many violations to the Monetary & Financial Law the authorities have committed in dealing with the Baninter banking crisis. Among these is the fact that the government chose, instead of dissolving the bank, to apply … <\/p>\n