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What could possibly go wrong?

26 September 2008

The credit crisis in the U.S. is yet another reason to pay attention to Mexican history

Thomas Black for Bloomberg:

Sept. 25 (Bloomberg) — U.S. legislators, under pressure to vote quickly on a $700 billion rescue fund for the U.S. financial system, may want to heed the missteps Mexico made more than a decade ago when its banks collapsed.

Mexico’s bailout, which the government said was needed to protect savings and homeowners, ended up costing taxpayers an estimated 20 percent of gross domestic product and slowed growth as credit dried up for consumers and small businesses instead of being re-activated. Many of the mistakes were rooted in a lack of oversight, said Bernardo Gonzalez-Arechiga, who served as a commissioner from 2002 to 2003 on the bailout agency, now known as the Bank Savings Protection Institute.

“There’s a basic similarity, as it happened in Mexico, in the sense that the federal government is attempting to have an extremely broad capacity to conduct all types of activities with very weak oversight by Congress,” Gonzalez-Arechiga, a former head of Mexico’s derivative market, said in an interview.

The article is well-worth reading in full.

2 Comments leave one →
  1. Mr. Rushing permalink
    26 September 2008 4:43 pm

    Uh oh, it is not good if the US is about to repeat Mexico’s failed socialist polocies!


  1. Fraude Mexico 2006 — part 4 of 10 « The Mex Files

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