- The Banco Central de Venezuela's web site (Venezuela's
Central Bank) relates BCV history from its September 8, 1939 inception.
At the time, conservative forces feared monetary instability under uncontrolled
Central Bank spending. As a result, opponents (unsuccessfully) said giving
it exclusive money creation power was unconstitutional.
-
- Thereafter BCV reforms occurred in 1943, 1960, 1974,
1983, 1984, 1987, 1992, 2001, and most recently making banking a "public
service" in 2010. More on that below.
-
- In 1992, legislation established "administrative
autonomy," in part transforming the bank into a "public legal
entity. Until then, (it was solely) corporate in nature." Thereafter,
Venezuela's president appointed "a collegiate body of seven members,
a president and six directors," requiring two-thirds Senate approval
for a six-year term. Its mandate is "monetary stability, economic
balance and well-ordered economic development."
-
- Under Article 156 (11) of Venezuela's 1999 Constitution,
National Public Power controls:
-
- "Regulation of central banking, the monetary system,
foreign currency, the financial and capital market system and the issuance
and mintage of currency."
-
- Under Section Three: National Monetary System, Article
318:
-
- "The monetary competence of National Authority shall
necessarily be exercised exclusively by the Venezuelan Central Bank (BCV).
(Its) fundamental objective....is to achieve price stability and preserve
the internal and foreign exchange value of the monetary unit....The Venezuelan
Central Bank is a public-law juridical person with autonomy to formulate
and implement policies within its sphere of competence."
-
- Article 319 says it "shall be governed by the principle
of public responsibility." Failure to do so "shall result in
removal of the Board of Directors....(It) shall be subject to oversight
by the Office of the General Comptroller of the Republic..."
-
- Under Venezuela's 2010 Organic Law on the Domestic Financial
System, banks, insurance companies, brokerage firms, and other financial
institutions "have the obligation of collaborating with sectors of
the productive, popular communal economy through healthy financial intermediation,
inspired by the spirit of productive transformation."
-
- In other words, their mandate includes funding traditional
economic sectors as well as social and communal production entities and
related organizations. In addition, advancing collective savings and promoting
alternative communal investments is required.
-
- Moreover, a recent Law of the Central Bank of Venezuela
amendment abolished its autonomy, mandating a new financial structure to
include adapting its "legal, administrative and functional structure
to the goals of the production model, and the Central Bank may not be detached
from the actual needs of the economy."
-
- BCV operations must also conform to the National Development
Plan "to meet the objectives of a socialist state," even though
Venezuela's economy is more private than public. The amended law, however,
states that "changes shall be construed as part of a progressive and
timely reform to the financial system and as an opportunity to enhance
the role of the institution in the transformation process of the social
production model."
-
- Monetary Control in America
-
- Under the Constitution's Article 1, Section 8, only Congress
has power "To coin Money (and) regulate the Value thereof...."
-
- Most often, however, throughout America's history, banks,
not the government, controlled the nation's money. For two centuries, private
banks fought for what they only partly had before success under the 1913
Federal Reserve Act. Earlier, Thomas Jefferson opposed the first Bank of
the United States, Andrew Jackson the second for similar reasons:
-
- -- distrust of profiteers controlling the nation's money;
and
-
- -- concern about foreign control of America's banking
system.
-
- As a result, Jefferson, in 1811, got Congress to refuse
charter renewal for the first US Bank. Later, Madison signed a 20-year
authorization. However, when Congress renewed it, Jackson vetoed it, calling
private banking control "a hydra-headed monster," entrapping
nations in debt.
-
- It's truer than ever today with Wall Street's stranglehold
on public wealth, able to create or destroy it freely. No responsible government
should allow it, but Republicans and Democrats endorse it, institutionalizing
big money power.
-
- Venezuelan Banking: A Public Service
-
- On December 20, Venezuela Analysis contributor Juan Reardon
headlined, "Venezuelan National Assembly Passes Law Making Banking
a 'Public Service,' " saying:
-
- Approved on December 19, it defines banking as a "public
service," required "to contribute more to social programs, housing
construction efforts, and other social needs while making government intervention
easier when banks fail to comply with national priorities."
-
- Formerly called the Law of Banking Sector Institutions,
the new measure "protects bank customers' assets" from owner
irregularities. It also prohibits banking hour changes, and mandates the
Superintendent of Banking Institutions to serve the interests of customers
as well as owners.
-
- United Socialist Party (PSUV) legislator Ricardo Sanguino
called it necessary "to consolidate a responsible financial sector,"
what's entirely absent in America where giant banks are more predators
than responsible financial institutions. Sanguino said Venezuela's new
law "restrict(s) unregulated speculation. (Now) there is absolutely
no chance that a banking institution becomes involved in irregularities,"
as happened previously.
-
- Speculation now will be controlled by limiting the credit
amount to individuals or private entities to "20% (of the) maximum
amount of capital a bank can have out....Commercial banks, insurance companies,
investment banks, and brokerage firms must also operate" separately,
unlike in America without restraint.
-
- Further, 5% of pre-tax bank profits must be used solely
for communal council projects, and 10% of bank capital for a fund "to
pay wages and pensions in case of bankruptcy."
-
- While the new measure doesn't suggest full banking nationalization
ahead, it does mean the government must act responsibly to secure the system
for all Venezuelans, not solely for powerful capital interests as in America.
Though many companies, including banks, have been nationalized in the last
decade, "private banks still play a majority role (with) roughly 70%
of assets."
-
- In May 2009, the government bought the Bank of Venezuela
from Spain's Santander Group after nationalizing it in July 2008. In June
2010, it took over Banco Federal operations after temporarily closing and
investigating it for failing to comply with minimum reserve levels and
legal quotas for productive sector investments. Other nationalizations
also occurred, amounting to 30% of Venezuelan banking, but not without
criticism.
-
- Distorted US Media and Washington Criticism
-
- On December 8, ahead of the new banking law, Wall Street
Journal writer Dan Molinski headlined, "Venezuela Threatens Takeover
of Large Banks," saying:
-
- Chavez "threatened to take control (of) Banco Bilboa
Vizcaya Argentaria SA and other large institutions if they don't ensure
that homes and apartments they finance are occupied immediately....(Earlier
he) threatened to expropriate banks....saying they must follow government
orders to provide more loans to small business owners and increase the
number of home loans to poor people in their portfolio."
-
- Imagine if Washington forced US banks to operate responsibly
instead of ruthlessly for maximum profits. Imagine if those refusing were
nationalized to do publicly what private predators reject. Instead, Molinski
reacted negatively to good policy, saying "many companies, including
banks" wonder if they're next to be nationalized for following business
as usual policies.
-
- A December 17 Reuters report headlined, "Venezuela
bank law makes nationalizations easier," saying:
-
- "Few analysts believe Chavez plans" sweeping
nationalizations, "but many say he could further increase the state's
role in the industry. US-based economists at IHS Global last week said
they believed the risk of nationalizations in the sector was not 'very
high.' " Analysts also said "the new law makes it harder, but
not impossible, to operate successfully."
-
- On December 17, AP headlined, "Chavez's allies approve
new Venezuelan banking law," saying:
-
- "Venezuela's banking association expressed concerns
about the law. Opposition lawmaker Ismael Garcia condemned (it) saying
private banks are left 'up against the wall.' " He also claimed the
law is "a prelude to a state takeover of the banking sector."
-
- On December 6, ahead of the new banking law, New York
Times writer Simon Romero headlined, "Venezuela Takes Greater Control
of Banks," saying:
-
- Chavez "assert(ed) greater financial control by
detaining one of the country's most powerful financiers and forcing the
resignation of the banker's brother," a minister and top Chavez aide.
-
- On December 4, Arne Chacon was arrested, his brother
Jesse, removed as science minister. Romero called it "purg(ing) a
group of magnates known as Boligarchs, who built fortunes (from) closes
government ties." Several other bankers were also detained, including
billionaire businessman Ricardo Fernandez Barrueco. He was arrested for
not explaining his source of funds to buy seven troubled banks, now seized.
-
- Chavez called them "vulgar thieves, white collar
robbers, (and) pickpockets." Romero raised the possibility of systemic
nationalization instead of explaining that only irresponsible ones may
be seized.
-
- On December 24, Romera again bashed Chavez, headlining:
"New Laws in Venezuela Aim to Limit Dissent," saying:
-
- "The National Assembly has approved (sweeping new
laws) that impose penalties for spreading political dissent on the Internet,
grant (Chavez) decree powers (for) 18 months and prevent legislators from
breaking with his political movement."
-
- An earlier article explained how "decree powers"
really work, accessed through the following link:
-
- http://sjlendman.blogspot.com/2010/12/chavez-given-enabling-law-power.html
-
- As for dissent, Venezuela's free and open society makes
America look despotic by comparison, a topic Romero and other Western journalists
won't touch. Instead he quoted legislator Ismael Garcia saying, "One
has to say it clearly: a new dictatorial model is being imposed in Venezuela,"
how opponents always describe Bolarvarianism.
-
- On December 23, AFP headlined, "Venezuelan opposition
decries Chavez 'coup,' " saying:
-
- New laws passed before January grant Chavez "sweeping
new powers." An unnamed US lawmaker urged the OAS "to stand up
against (his) 'tyranny,' " the same Washington/US media theme since
February 1999 when he took office. They've called him a dictator, a Latin
American caudillo, even another Hitler, threatening freedom and democracy
throughout the region. Conveniently, they've ignored his electoral landslides,
judged free, open and fair by independent observers, including the Carter
Center.
-
- After receiving Constitutionally permitted Enabling Law
power for 18 months, opposition lawmakers "condemn(ed) the coup d'etat
that is taking place by the regime," accusing Chavez of allying with
Cuba "to implant a communist system in Venezuela through a totalitarian
and militarized state."
-
- In Washington, extremist Rep. Ileana Ros-Lehtinen, incoming
House Foreign Affairs Committee chairperson, "blasted the OAS for
doing" too little, saying "Choosing to take no side in the battle
between tyranny and democracy in Venezuela only helps the tyrannical side."
-
- State Department spokesman Philip Crowley accused Chavez
of "finding new and creative ways to justify autocratic powers."
-
- Other Banking Reforms
-
- Last August, the National Assembly reformed the Bank
Law, prohibiting owners, directors, and administrators of media or telecommunication
companies from managing banks. Its purpose is to prevent information manipulation,
including deceptive offers and other type fraud, benefitting them at the
expense of ordinary citizens.
-
- It also clarified what institutions are affected. As
a result, Sudeban (the Superintendency of Banks and other Financial Institutions)
will require Sovereign People's Bank (BPS) to provide more communal services
by facilitating deposits, withdrawals, savings, and credit issuance.
-
- In 1999, BPS was founded to fight poverty by offering
non-financial services, like training and micro-financing, to communities,
small companies, and cooperatives, sectors private banks often ignored.
-
- Added US-Venezuelan Tensions
-
- Relations are further strained after Venezuela's Foreign
Affairs Minister Nicolas Maduro rejected America's proposed ambassador,
Larry Palmer, saying:
-
- "It's well known how (he) broke the basic rules
of respect for the country that was going to receive him, crudely insulting
Venezuela's institutions," including suggesting the country's military
had "morale and equipment problems," something Washington should
exploit advantageously. He also cited Cuban influence and accused Chavez
officials of ties to FARC-EP "terrorists," ignoring their freedom-fighting
credentials with or without ties anywhere outside Colombia.
-
- A Final Comment
-
- Count on opposition lawmakers, hostile US ones, Venezuela's
right-wing media, and its US counterparts to use any opportunity to bash
Chavez and Bolivarianism. The same decade-long drumbeat echos now about
banking and other reforms. They're absent in big money-run America where
Wall Street and other corporate predators exploit working households for
themselves.
-
- Under Obama alone, regressive legislation solidified
corporate control of healthcare, food, the media, telecommunications, and
finance and banking, besides expanding militarism, imperial wars, and homeland
repression. Ahead is planned austerity when Main Street stimulus is needed
- a new New Deal as bold and innovative as Roosevelt's.
-
- Instead, free market fundamentalism sacrifices public
welfare for society's super-rich while assuring unrestrained corporate
profit-making. In 2011, expect Obama to shift further right to accommodate
greater Republican control and more pressure to serve powerful constituency
interests, not working Americans losing out for their enrichment.
-
- Stephen Lendman lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com
and listen to cutting-edge discussions with distinguished guests on the
Progressive Radio News Hour on the Progressive Radio Network Thursdays
at 10AM US Central time and Saturdays and Sundays at noon. All programs
are archived for easy listening.
-
- http://www.progressiveradionetwork.com/the-progressive-news-hour/.
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