they need George Bailey, Its a Wonderful life-> Argentina Closes Banks Indefinitely to Block Deposits (Update3)
By David Plumb
Buenos Aires, April 19 (Bloomberg) -- Argentina closed banks indefinitely in an effort to block a rising outflow of deposits.
Central Bank Vice President Aldo Pignanelli told the Argentine Banks Association that the closure would last until Congress approved legislation halting withdrawals, according to a copy of an internal association memo obtained by Bloomberg News. A central bank spokeswoman declined to comment beyond confirming that banks had been closed.
Argentines have pulled as much as 350 million pesos ($111 million) a day from banks this week, in part by obtaining court injunctions against the government's freeze on accounts, economists estimate. Argentina froze deposits in December in an effort to prevent a collapse of the banking system as savers rushed to withdraw funds, anticipating the government's $95 billion debt default and currency devaluation.
Total deposits dropped 11 percent to 71 billion pesos this year even as the government imposed withdrawal restrictions, said Standard & Poor's analyst Gabriel Caracciolo.
Franklin D. Roosevelt took a similar step to close banks in the U.S. to halt a banking panic during the Great Depression.
On March 4, 1933, the day after taking the oath of office, he declared an indefinite banking ``holiday'' until Congress passed legislation giving him emergency powers over financial institutions. The bill was passed and the following week the healthiest banks were allowed to reopen while weaker banks were shuttered.
Congress Bill
President Eduardo Duhalde plans to send a bill to Congress as early as this weekend that would convert blocked deposits into government bonds and halt further withdrawals, presidential spokesman Eduardo Amadeo said on TodoNoticias television.
Economy Minister Jorge Remes Lenicov and Central Bank President Mario Blejer arrived in Washington D.C. today for the International Monetary Fund's spring meeting, where they hope to convince the fund and U.S. officials the country can meet conditions for new loans.
Remes Lenicov has scheduled some 19 meetings over three days, including with U.S. Treasury Secretary Paul O'Neill and National Security Advisor Condoleeza Rice today. Remes declined to make comments to reporters after his meeting with O'Neill.
The Argentine peso dropped more than 4 percent to 3.13 per dollar, declining for a third day. |
