Banco Federal intervened, obviously political, long overdue

June 15, 2010

So, Banco Federal was intervened yesterday, years late, politically timely. Just think, the Government via the Depositors Guarantee Fund now owns 20% of its media nemesis Globovision.

But I am getting ahead of myself.

Banco Federal had been in trouble for a long time, anyone that can read a balance sheet knew that. It participated eagerly in the “structured note” fiasco, had to cover some of the losses (US$ 60 million if I recall correctly) but in the end accounting smoke and mirrors was insufficient.

With the intervention of the banks of the “bolibourgeois” last November and December, rumors spread about Federal, fueled by none other than Hugo Chavez, who mentioned repeatedly on nationwide TV the name of the owner of the bank, saying he would have not trouble intervening his bank if necessary.

But he did have a problem with doing just that. The clumsy initial steps in the intervention of  a dozen or so banks, led to rumors about Federal being in trouble and the Government began to worry about the whole system shaking, if it acted too rashly. Thus, a decision was made to postpone the inevitable, until things “improved”. But things never improved much. In fact, Banco Federal stopped publishing its monthly financials in the newspapers, let alone its 2009 financials, which were never published, as the law mandates. Enough to make you want to stay as far away from the bank as possible. The bank had a lot of illiquid investments in its balance sheets that most specialists know what it means: I am hiding huge losses in those investments, hoping there will be a brighter day.

But the brighter day never came. The Government reportedly even gave Federal money to prop it up, but it was a lost cause. It was just a matter of having the excuse to do it. Intervening it was long overdue.

The Government pressured Globovision and its main owner Guillermo Zuloaga and Ravell was let go, Zuloaga was threatened with the charge of hoarding cars and later of accusing Chavez of murdering people. The second charge was harder to prove, thus they went bank to the hoarding.

But Globovision never changed its editorial line. Thus, the next to the last step was taken: Take over Mezerhane’s bank, which owned 20% of Globovision, and they did.

If this does not do it, then the TV station itself will be next, but maybe the owners can now be persuaded that the Dictator means business, they did not seem to understand it before.

Globovision is the only TV media outlet whose outpost is not sanitized and sterilized prior to broadcasting. There can be dozens of protests in Venezuela in any given day and only Globovision shows it, the normalcy in the rest of the media is somewhat scary.Orwell would have been proud of Venevision and the rest.

Thus, the next to last political decision has now been made: Seize Banco Federal. Will Chavez dare to take the next step in the sequence before the September elections? Will he go first for the banks? For the food division of Polar? Or for Globovision?

All three would be the magical trifecta for the Dictator, but can he afford to do it?

7 Responses to “Banco Federal intervened, obviously political, long overdue”

  1. […] tweet was from June 30, a couple weeks after the government took over (deservedly) Banco Federal, intensifying an already tense situation after the take-over of about a dozen other […]

  2. qtxo Jose Says:

    My funny BF adventure: Last year while visiting Margarita I went to a Banco Federal office and they broke my passport while scanning it (only the cover) I had no problem returning to Europe and I forgot it completely.

    Now last week I arrived at Maiquetia airport and the immigration official rejected the passport so he sent me to the office where the boss told me they were going to send me back to Europe. Of course I am an experienced traveller and knew it was only the typical retaliation for the number of Venezuelans rejected at European airports, I met some of them during the hour or so I spent waiting in the office.

    So, he applied glue to my passport and told me that they were doing a special favour to let me enter the country and…….. if I could buy them a bottle of whiskey from the duty free shop!!!!!! I went out laughing to myself…

    2 days later, last Monday I went to a Federal office to change a check and they made me wait an hour but finally I was able to return home with my money and half an hour later I saw the news about the intervention.

    I don’t know where is going this country but I always return home with lots of funny (from my side) things to tell.

  3. island canuck Says:

    It’s like we all have a vice on our heads & he turns the screw 1 notch at a time.

    You know it hurts a little more each day but you keep going until the pressure finally explodes your head.

    We aren’t far from that day.

  4. Steve Says:

    ” … but maybe the owners can now be persuaded that the Dictator means business,”

    You think they have had any illusions??

  5. Alexander Says:

    Yes he can afford it, he is playing hard, I do not think he cares about S26 elections, the revolution has accelerated, nobody seems to note yet, particularly he opposition in collective; is the normal path of revolution. It happens on 1925 when Staling did it in Russia and in 1961 in Cuba, and so on. It is matter of life or die for the revolution and its agents, and Venezuelan oil still is a extraordinary incentive to “fight” for the power, and this looks once and for all!. Ok I know it, is not a win win game

  6. Robert Says:

    Here’s my take: 1st Globo to hide the 2nd and 3rd, then banks (because he can’t fund the new exchange system), and then Polar to blame for the shortages. And then you have no news, dollars or food but if no one is talking about it, then maybe it doesn’t exist?

    I love the Venezuela expression to “cover the sun with one finger.” Hard to be believe that was developed before Chavez day as it fits him to a T.

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