Informaciones útiles para trabajos posteriores

Before 1974, banks in Mexico were specialized banks in that they provided limited services and/or served only a limited slice of users of financial services, according to the type of service each bank provided.

In order to promote the development of the banking sector and a more efficient use of their resources, a 1974 legal amendment created the innovative figure of what was called banca multiple [multiple banking] (also known internationally as universal banking) whereby banks were to render multiple financial services (or all

94 _{From the Spanish blindaje financiero.}

95 _{See CNN-Expansión, “Acontecimientos económicos, tipo de cambio, PIB, empleo 1994-2009”}

[Economic Events, Exchange Rate, GDP, Employment 1994-2009]; available at: http://www.cnnexpansion.com/media/2009/07/08/acontecimientos.pdf.

96 _Id.

97 _{FTA Mexico-TN (Triángulo del Norte [North’s Triangle], between Mexico, El Salvador, Guatemala}

of them) to all kinds of users, increasing flexibility and risk diversification.98 The process of mergers to create the new multiple banking banks started in December 1976, along with the inauguration of the López-Portillo administration.99

More legislative changes to the regulation of the banking sector came in 1978 aiming to establish effectively “multiple banking” banks, firms “authorized to exercise the following operations: deposit-taking, savings, financial intermediation, mortgages and trust.” As part of the new legislation, it was prohibited for independent specialized institutions to render the abovementioned services that were now reserved to banks.100

The six years of the López-Portillo presidential administration (1976-1982) witnessed drastic changes in the shape of the Mexican financial system, from the early days of the newly legally recognized financial groups,101 and the establishment and consolidation of the figure of “multiple banking” banks to the expropriation of that newly developed banking sector.

On September 1st, 1982, during his overly dramatized Sixth (and last) Presidential Report to the Mexican Congress, López-Portillo announced what he called “the nationalization of the private banks,” which was in fact an expropriation or even a confiscation, rather than a nationalization, since the banks’ owners were Mexicans. Ironically, one of the two private banks that was not expropriated was Citibank, the one single foreign bank in Mexico back then.102

98

See CASE STUDY:THE CASE OF MEXICO, at 2.

99 _{See Turrent, op. cit., at 14.} 100 _{Id., at 15-16.}

101 _{Another feature to highlight about the Mexican financial system in the early 1970 was that most}

banks were usually part of a “financial group” along with another or other companies providing other financial services such as mortgage companies, financing societies, etc. Such financial entities were controlled by the same holding and often shared a brand-name. In December 1970, a new legal provision imposed on them “the obligation of following a coordinated financial policy and establishing a system of reciprocal guarantees in case of losses.” What had been so far informal financial groups started to acquire official recognition over the next five years. By December 1974, there were 15 financial groups (created around a bank) officially recognized (see id., at 13-14).

102 _{See id., at 18; and W}

ENDY DOBSON and PIERRE JACQUET,FINANCIAL SERVICES LIBERALIZATION IN THE WTO (1998) at 273. The Mexican Government expropriated 58 of the 60 private banks. The two private banks that were not expropriated were Citibank, and “Banco Obrero” [Labor Bank] owned by the powerful Confederación de Trabajadores de México (CTM) [Confederation of Workers of Mexico]. CTM has been and is still the most numerous confederation of labor unions in Mexico. In 1947 the CTM leadership decreed that all its members would be members of PRI, and thus the CTM

According to the expropriation decree, the expropriation was due to the following reasons:

…private banks had acquired excessive profits by rendering a public service by government-concession;103 they had created monopoly phenomena according to their interests with the public’s money; in order for credit not to continue to be in the high strata of society and to make it come timely and affordably to the larger part of the people; to facilitate the getting out of the economic crisis that had been aggravated by the lack of direct control of the State over the financial system; to maintain public peace and to be able to adopt the necessary measures oriented to correct domestic disruptions.104

In the wording of governmental discourse, the main argument was that the expropriation was necessary because bankers were saca-dólares (“dollar-drainers”), and/or helping other individuals who were dollar-drainers, who by causing such a flight of capitals away from Mexico were responsible of the economic crisis. A dollar-drainer was whoever moved their USA dollars abroad from Mexico (to avoid the economic crisis).

People protecting their private property against the effects of the economic crisis were labeled as traitors. López-Portillo claimed to have a “little list” of the saca-

dólares who were hurting the Mexican economy. That list, however, was never

made public; perhaps because it was not that little and included members of his own administration.105

became one of PRI’s “three sectors” (the labor sector). The expropriation decree also exempted the representation offices of foreign banks in Mexico (see Turrent, op. cit.).

103 _{“Public service” is a technical term in Mexican Administrative Law. In this technical sense, a}

public service is a “juridical-administrative institution in which the entitled one is the State and whose end is to satisfy in a regular, continuous and uniformed manner public needs of essential, basic or fundamental character; it is concretized through individualized provisions which may be supplied directly by the state or by particulars by means of concession. Because of its nature, it shall always be subject to norms and principles of public law… Characteristics. They are created and organized by the State by means of laws emanated from the Legislative Power; they must be continual, uniform, regular and permanent; they always suppose a work of public interest; they satisfy the general interest opposing the particular; they satisfy material, economic, safety and cultural needs; they can be for profit or non-profit… (DICCIONARIO JURÍDICO MEXICANO [Mexican Legal Dictionary], 5th ed., (1992) at 2906. As already referred above, the 28th Art of the Mexican constitution is the one that lists the activities that are regarded as “public service”.

104 _{Turrent, op. cit., at 17.}

105 _{See John P. Cogan, Jr. Privatization of the Mexican Banking System: Quetzalcoatl and the} Bankers, 23 ST.MARY’S L.J.753 (1991-1992) at 758.

The banks’ expropriation came hand-in-hand with the “generalized currency exchange control,” announced in the same paragraph of the same Sixth Presidential Report, right after the banks’ nationalization. The “reckonings” presented to justify such currency exchange control were summarized as follows:

Austerity actions and adjustments in matters of political economy that had been applied to contain the crisis had not rendered results chiefly because of the amounts of capital flights. The economic crisis that had been suffered at least since the middle of 1981 had been caused by two phenomena: contraction of the foreign markets for Mexico’s export products, and the unavailability and higher cost of foreign credit.106

As explained above,107 along with the expropriation and in order to furnish it with constitutional grounds, amendments to the constitution were required. Those amendments went beyond the expropriation of the existing private banks establishing an absolute prohibition for the private sector to engage in banking activities.108 A total of 49 private commercial banks were expropriated.109

1.2.2 The Years of Government-Owned Banks

Government’s close control over the banking sector (itself a means of controlling the financial system, and the economy in general) was effective immediately after the expropriation. In September 4, the government announced measures ruling the interest rates banks would be paying and the currency exchange rates applicable to banking operations.110

Although decreed by López-Portillo, it was the De la Madrid administration which had to indemnify the banks and organize the government’s management of the government-owned banks, an unprecedented situation in Mexico. By the time of the expropriation De la Madrid was already president elect but was no consulted by López-Portillo about the expropriation, a decision with which De la Madrid disagreed.

106

Turrent, op. cit., at 17-18.

107 _{See supra 1.2. General Political Economy Background and Context of Pre-NAFTA Mexico.} 108 _{See Appendix 2: Excerpts of the 1982 and 1983 Amendments to the Mexican Constitution.} 109 _{Id., at 21.}

110