Opposition deputies and situation group disagree at the Floor on consequences of Provisional Measure 470/09.

On Wednesday, 2nd, the Floor backed Provisional Measure (MP) 470/09, authorizing Federal Government to transfer to the Caixa Econômica Federal up to R$ 6 billion in public bonds in order to increase its reference capital and allow it to carry out new credit operations. The matter has yet to be voted on by the Senate.

The approved text was proposed by the rapporteur, Deputy Jovair Arantes (GO), leader of the PTB. One of the modifications introduced by him allows the Federal Government to transfer R$ 1 billion to the Banco do Nordeste with the same target as applied to the Caixa.

Both transfers will be classified as “hybrid instruments of capital and debt”, according to the National Monetary Council (CMN) regulations. This procedure – receiving the credit and accounting it only as debt - prevents the banks from exceeding prudent limits set for the financial system, in terms of the rate of lending and liquid assets.

Opposition criticisms
Deputy Ronaldo Caiado (GO), leader of the DEM, criticized the PM claiming that government rules out the “free competition” principle when it gives “for free” resources for the Caixa “to enter the market and to purchase private banks”. According to him, “that public money” is going to the benefit of Banco PanAmericano, in which the Caixa recently purchased a 49% share.

Deputy Fernando Coruja (SC), leader of the PPS, said that the PM intended to compensate for a previous government decision when it moved to the National Treasury all legally frozen deposits. With that, said Coruja, the financial institution was decapitalized and now requires that R$ 6 billions. "But it is a scandal; they are giving money for Caixa to buy bankrupt banks”, he said referring to Banco PanAmericano that was in financial troubles.

Deputy José Aníbal (SP), leader of the PSDB, focused his criticisms on the origin of the resources directed to Caixa. According to him, the money could come from either the Federal Government’s primary superavit or by issuing public bonds. Deputy Aníbal backed an ammendment to establish a 50% proportion for both sources. "Otherwise the whole capital increase could be made through bond issues", he warned.

Another deputy who criticized the PM was Ivan Valente (SP), leader of the PSOL. He argued that his party backs a stronger role for public banks “but not through the expansion of public debt”.

The Government Group
Eduardo Valverde (PT-RO) said that with the capital increase, the Caixa is going to be more flexible when financing low-income housing projects, access to education and other benefits for citizenship. Paulo Rubem Santiago (PE), deputy-leader of the PDT, recommended his colleagues to vote with the PM. According to him, public banks “must take the lead in pulling down the spread rate and setting an example to the financial market".

On other hand, Deputy Fernando Marroni (PT-RS) backed the expansion of the Caixa implied by the PM. "The Caixa must grow; previously it and Bank of Brasil were forbidden to grant credit to small clients but now government provides social inclusion and citizenship through the Caixa, the greatest funder of housing ", he argued.

He pointed out that the opposition’s critical remarks are odd. "Why can´t we strengthen the Caixa? Shouldn´t we strenghten what is ours, what is working properly and solving social and economic problems in the country?" he asked.

Deputy Pompeo de Mattos (PDT-RS), in spite of belonging to the government group, backed modifications to the PM text, in order to avoid private commercial banks losing competitiveness compared to Caixa. "We can´t allow inequality within financial market", he warned.

Reporting - Luiz Claudio Pinheiro
Edition – João Pitella Junior
Translation – José Schneider