Monday, December 07, 2009

Entire countries face bankruptcy: Venezuela, Dubai, Ireland and Greece

SHOOT: The article below from the NYT examines a crisis in banking in Venezuela.

Together, all the seized banks are estimated to account for less than 20 percent of the country’s banking system, dimming some fear that the crisis could infect other areas of Venezuela’s oil-based economy and easing concern of a Dubai-like debt crisis’s happening in Venezuela.
clipped from

“We have been watching in awe at everything that has gone on over the past week, from the collapse and runs on the banks to the revolution eating its own,” said Russell M. Dallen Jr., who oversees capital markets operations at BBO, a Caracas investment bank.

The crisis in the banking system began unfolding last Monday when the government seized control of four troubled banks, including those with ties to Mr. Fernández Barrueco, and then seized three other banks on Friday. Mr. Fernández Barrueco was arrested after he could not explain the origins of money used to buy the banks.

Bankers and economists in Venezuela also said it was not clear whether underlying financial problems at the banks had pushed the government to act. Depositors nervously lined up at some financial institutions in Venezuela last week in attempts to withdraw money, heightening concern over possible bank runs.

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