Monday, March 28, 2011

Afghan Central Bank Learns from the Federal Reserve

NYT reports:
When a brother and nephew of an Afghan vice president wanted to build up their fuel transport business, they took out a $19 million loan from Kabul Bank. When a brother of the president wanted to start a cement factory, he took out a $2.9 million loan; he also took out $7.9 million for a luxury townhouse in Dubai. When the bank’s chief executive officer wanted to invest in newly built apartments in Kabul, he took almost $18 million

The terms were hard to beat: no collateral, little or no interest. And repayment optional, at least in practice...Those are just a few of the loans detailed in a damning internal report by Afghanistan’s own Central Bank, which depicts the Afghan political elite as using Kabul Bank, the country’s biggest financial institution, as their own private piggy bank.
This is really not any different from the way the Federal Reserve takes care of the elite in America (See TARP), except in Afghanistan the transactions are more transparent.

But the results are always the same. More from NYT on Kabul Bank:
“It was like a Ponzi scheme,” said a Western diplomat familiar with the bank’s dealings. “The bank had to keep marketing and getting more deposits to fund the loans that they weren’t getting interest on.”

1 comment:

  1. There's a new central bank and oil company in rebel held Libya: