Chavez to Strip Bank Fund's Assets

By Natalie Obiko Pearson
March 29, 2007
President Hugo Chavez ordered Venezuela's bank deposit protection fund to transfer its assets "to the poor," the latest move threatening to undermine one of the country's autonomous financial institutions.

Venezuela's Fogade insurance fund holds properties and other assets, which guarantee deposits in the banking system, much like the U.S. government's Federal Deposit Insurance Corporation.

"I want all the assets held by Fogade to be passed to the Republic," Chavez said Thursday on his "Hello, President" TV talk show.

"Fogade has many warehouses, it has many properties. All that I am going to give to the people, to the poor," he said. "Fogade must disappear."

Chavez added Fogade has a "long list" of acquired properties that are not being put to use. "This cannot be. Pass me (the list) and I'm going to pass it on to the people," he said.

Chavez said the government would compensate the fund "little by little" for any assets that it loses.

He also said banking deposits would remain insured but did not say how.

Fogade, although affiliated with the Finance Ministry, is an autonomous institution. It played an important role in re-capitalizing Venezuelan banks after a 1994 collapse of the banking system that cost the government some $11 billion in bailouts and damaged the economy for years.

Chavez also diverted billions of dollars (euros) from the central bank's foreign reserves _ which are critical to backing a nation's currency _ toward a state development fund that finances his popular social initiatives.

Since winning re-election in December and vowing to deepen his socialist revolution, Chavez has pledged to do away with central bank autonomy altogether.