[Marxism] Mexico Front-Runner Worries Bankers (WSj)

Walter Lippmann walterlx at earthlink.net
Mon Apr 3 22:37:03 MDT 2006

Left Bets on Lopez Obrador in Mexico

Mexico, Apr 3 (Prensa Latina) Representatives of two Mexican
progressive groups asserted they will create a movement for change to
support the candidacy of presidential hopeful Andres Manuel Lopez

The "Red de Izquierda Revolucionaria" (Revolutionary Leftwing
Network), led by Camilo Valenzuela, and the "Colectivo de Reflexion"
(Group of Reflexion), headed by Armando Martinez Verdugo, a veteran
leader of the Mexican Communist Party, have ratified that stance.

It is about building a revolutionary leadership of the people´s
movement, with some decades of struggle, to ensure Lopez Obrador´s
victory leads to a process to change Mexican society, they stated.

Speaking to reporters, Valenzuela said he was confident of Lopez
Obrador´s win in the July 2 elections because millions of citizens
want Mexico to change.

Lopez Obrador is the candidate for the Por el Bien de todos coalition
made up by the Revolucion Democratica (PRD), Trabajo and Convergencia
por la Democracia, parties inclined to the leftwing and

The "Red de Izquierda Revolucionaria" is one of the tendencies within
the PRD, of which Valenzuela is a leader.


Mexico Front-Runner
Worries Bankers
López Obrador Advisers Say
He Prefers 'Moral Suasion'
Rather Than Heavy Regulation
March 29, 2006; Page A8

MEXICO CITY -- The front-runner in Mexico's presidential election has
pumped up support by attacking the nation's bankers for growing rich
while allegedly doing little for ordinary Mexicans -- raising
concerns that he would resort to heavy-handed controls should he win
the July vote.

Gauging how market friendly -- or unfriendly -- the populist Andrés
Manuel López Obrador would govern has become a boardroom obsession in
Mexico and the U.S. The answer has broad implications for investment
and stability in a nation that has become a major U.S. trading
partner, as well as a profit center for companies such as Wal-Mart
Stores Inc., MetLife Inc. and Citigroup Inc., since joining the North
American Free Trade Agreement in 1994.

Whether Mr. López Obrador wins or loses, Mexico's banks, mainly owned
by international giants such as Citigroup and HSBC Holdings PLC, are
in the cross hairs of Mexican authorities, such as the central bank,
because they lend far less than banks in other big economies in the
region, such as Brazil and Chile. At the same time, they charge fees
for services that are often higher than those in the developed world,
excluding many of Mexico's poorest from the banking system.

Bankers say they are already well on the way to increasing lending
and reducing fees amid an environment of increased competition.

Mr. López Obrador says he wants them to change more rapidly. Despite
his tough talk, Mr. López Obrador's economic advisers and some top
bankers say they believe he would govern more moderately than he
campaigns. They expect heavy rhetoric -- "moral suasion" they call it
-- rather than heavy regulation if he wins the July election.

One measure under consideration by the candidate, his advisers say,
is granting more operating licenses to smaller regional banks and
offering them cheaper sources of funding to boost competition. 
A similar formula was used successfully by the current President
Vicente Fox to spur mortgage lending in recent years.

State banks, such as development bank Banobras, also could be made
more competitive, his advisers argue. Banobras, for example, is
unable to lend at competitive rates because of runaway pensions,
salaries and other overhead. Reducing these costs would allow the
bank to compete with private lenders. A López Obrador administration
would also back central-bank efforts to prod bankers to lower fees.

"Heavy-handed tactics aren't in the cards," said Rogelio Ramírez de
la O, a University of Cambridge-trained economist who is advising Mr.
López Obrador. "He may be more forceful, but he doesn't want to go
outside the established mechanisms and legality."

The popularity of the former Mexico City mayor owes much to a
regional backlash against a U.S.-sponsored recipe of free-market
policies, which has helped populists win the presidencies of
Venezuela, Argentina and Bolivia. In Venezuela, President Hugo Chávez
has fostered a credit boom by capping banks' lending rates and
forcing them to hit loan quotas to areas such as agriculture and
low-income housing. In Argentina, President Nestor Kirchner has
restricted beef exports to stem inflation while tangling with
foreign-owned utilities over charges.

But other Latin American nations have also elected leftist leaders
who have taken a much lighter regulatory approach, including Brazil's
president, Luiz Inacio Lula da Silva.

The unanswered question: Is Mr. López Obrador more like Mr. da Silva
or Mr. Chávez?

Mr. López Obrador's senior economic advisers say to expect
moderation. But it is unclear whether Mr. López Obrador, who leads
most presidential polls by 10 percentage points over his nearest
rivals, will ultimately rely on the advice of economists like Mr.
Ramírez de la O. Parts of his economic platform suggest a
retrenchment from market-friendly policies, including a pledge to
modify the North American Free Trade Agreement to protect small
Mexican growers. The U.S. and Canada are highly unlikely to agree to
any changes in the trade pact.

The heart of Mr. López Obrador's campaign is a promise to reduce
corruption and find ways to improve the prospects of the working
class in a country with one of the world's biggest divides between
rich and poor. Banks are a big part of his message.

Earlier this month, he labeled his closest rival in most polls,
Felipe Calderón of the pro-business National Action party, a "puppet
and lackey" of the banking establishment. Mr. Calderón has responded
by running television ads comparing Mr. López Obrador to Venezuela's
Mr. Chávez.

Mr. López Obrador has also suggested that central bank Governor
Guillermo Ortiz should resign, alleging that the mid-1990s bank
bailout he helped orchestrate enriched bank owners at taxpayer
expense. Mr. Ortiz hasn't responded publicly to the charges and his
term of office runs until December 2009. Mr. López Obrador wants a
congressional investigation of the bailout modeled after the 9/11
Commission in the U.S., if he is elected.

However, in his previous job as Mexico City mayor, Mr. López Obrador
took a pragmatic approach to the banking sector. One of Mr. López
Obrador's favorite campaign targets is Roberto Hernandez, who became
a Citigroup director after selling his Banamex bank to the U.S.
financial giant in 2001. Mr. López Obrador has criticized the deal
sharply because it was structured so that Mr. Hernandez paid no taxes
on the sale.

But when Mexico City was looking for a bank to underwrite one of the
country's biggest ever municipal bonds, Mr. López Obrador chose
Citigroup's Banamex to handle the deal.

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