Ecuador's Bankers

Yesterday Ecuador's government seized around 200 companies, including TV stations, associated with the now defunct Filanbanco. In the 1990s, bankers in Ecuador formed hundreds of companies (ghosts in many cases), wrote loans to the new companies from the banks they managed, sent the money off shore, and let the ghost companies go bankrupt. Nearly half of the banks collapsed after the money was stolen and the bankers fled the country to enjoy their stolen millions as Ecuadorian account holders suffered the loss of their savings. The theft was far too much for deposit insurance to cover.

For the last few years, the Ecuadorian government has pushed to recover the assets that guaranteed the false loans, but, as is the S&L crisis in the US, they discovered that the assets were wildly overvalued or protected by transfers to new owners who claim to have no connection with the bank thieves whom the country has not been able to extradite.

Critics of yesterday's seizures are claiming that the Correa government seized the TV stations in an attempt to control the media, yet even most journalists support the seizures.

The issue is yet another example of the failure of contemporary "democracy." Only the very wealthy or their surrogates can afford to get elected and once elected they buy the news media and control the wealth of nations. For many years, the bankers in Ecuador controlled the government just as the weapons makers have taken control in the US. President Correa is perhaps the only president who is trying to give control back to the people and effect justice. Yet the odds of rebuilding a system of government in a country with one of the worst systems of public education in the new world are very slim. Populist candidates here have bought votes by throwing around five-dollar bills and making absurd promises.

Correa promised to sell the seized companies at auction, but only a handful of Ecuadorians can afford to buy a Television company. What if Rupert Murdoch shows up at the auction?

See today's BBC story Ecuador head defends TV seizures