Fobaproa

FOBAPROA (Fondo Bancario de Protección al Ahorro or "Banking Fund for the Protection of Savings") is a contingencies fund created in Mexico in 1990 to attempt to resolve liquidity problems of thebanking system in that country. The Fobaproa was applied in 1995 during the economic crisis to protect all Mexican banks from going bankrupt, and thus destroying the Mexican Economy. However, a number ofcorruption cases involved in the action have been discovered and since then, it has become an object of criticism by members of the opposition.

Contents [hide]
1 Background
2 Fobaproa is created3 1994 economic crisis
4 Preventive measures
5 Controversy
5.1 PRD
5.2 PAN initiatives
5.3 PRI initiatives
6 Executive and Legislative Branch agreements
7 References
8 External links[edit] BackgroundIn 1982, at the end of the presidency of José López Portillo (December 1976–December 1982) the government found itself unable to meet demands for United States dollars and devaluatedthe peso from a value of 26 to 47 pesos per dollar. A consequence was an extremely high default debt. The López Portillo administration then decided to nationalize the banking system on September 1 ofthe same year, paying 3 trillion pesos (approximately 63 billion dollars at 47 pesos/dollar exchange rate) to acquire public and private credit institutions who had an accumulated debt of 25 billiondollars. The following year, in the middle of an economic crisis, president Miguel de la Madrid (December 1982–December 1988) created the FICORCA (Fideicomiso de Cobertura de Riesgo Cambiario or"Exchange risk coverage fund") financed by a loan that would also finance the fiscal deficit, the external debt and the economic activity of the country. This fund saved twenty of the largest companies ofthe country from bankruptcy; these companies owed 12 billion dollars through notes with the Banco de México. On November 10, 1986 the FONAPRE (Fondo de Apoyo Preventivo a las Institiciones de Banca...