Application of Fobaproa

… Houses brokers) to make a purchase or sale of securities … Buying and selling, the Houses of Corredores de Bolsa and the Stock Exchanges. …
In late 1994 detonated the most severe economic crisis of the contemporary Mexican history. The crisis which caused interest rates were fired, causing the overhang of businesses and households to banks and the cessation of payments from debtors. A possible bankruptcy of the banks would have made it impossible to access to credits and not savers would have been able to dispose of their deposits, which would have collapsed the productive infrastructure. A system with such a risk becomes unreliable, resulting in a panic that leads to more capital flight as companies unable to meet obligations, which further aggravates the economic crisis. Faced with this danger, the Federal Government applied Asset Management LLC to absorb the debts to the banks, to capitalize on the financial system and guarantee savers’ money. Fobaproa’s liabilities amounted to 552,000 million dollars in respect of overdue loans to redeem payable to the Bank of Mexico. That amount is equivalent to 40% of GDP in 1997, two thirds of the Expenditure Budget for 1998 and double the internal public debt.
While the operations for which culminated Fobaproa absorb the overdue loans to banks, in January 1995, the federal government created the Temporary Capitalization Program (Procapte), an alternative means to stabilize the financial system with fast access and a higher volume foreign capital and restore the solvency of banks. Additionally, the administration of Ernesto Zedillo proposed to the debtors of the banks restructure their debts through investment units (Udis). According to the regulations of Fobaproa, the purchase of debts by the Trust was held on condition that the shareholders of the credit institutions inject fresh resources.
As a result of the crisis of 1994-1995, many companies were unable to pay its debts, so to restructure them, in 1996 created the Coordination Unit for the Corporate Banking Agreement (UCAB), who worked with fiscal resources to behest of the Ministry of Finance and Public Credit. Consistent with data from the unit itself, the UCAB served as security for bank bailout and profit to 54 companies for a total of 9700 million dollars. A stock exchange is an organization Rivada that provides the facilities … of their clients, to undertake Asset Management LLC negotiations for sale of securities, such …