The Bush Agenda by Antonia Juhasz

Author:Antonia Juhasz
Language: eng
Format: mobi, epub
ISBN: 9780061977619
Publisher: HarperCollins
Published: 2015-08-30T04:53:48+00:00

Order #4038 (September 19, 2003; replaced with Order #94,39 June 6, 2004), the “Bank Law,” opens the Iraqi banking sector to foreign ownership. Under Order #40, foreign banks were allowed to enter this previously closed sector and purchase up to 50 percent of an Iraqi bank. The total number of licenses for banks controlled by foreign companies was limited to six through December 31, 2008. One year later, Bremer expanded the Bank Law with Order #94, allowing foreign banks to purchase 100 percent of Iraqi banks and to open subsidiaries and branches without restriction. In addition, banks owned by Iraqis are not to be granted any legal preferences over foreign-owned banks (although the opposite is possible). Therefore, the Iraqi government can not require, for example, that a certain percentage or a minimum number of banks in Iraq be owned by Iraqis, or that tax breaks or subsidies be given to small, community owned and run banks committed to providing services for groups or locations that a foreign bank might consider unprofitable.

The HSBC Bank of London was one of the first foreign banks authorized to operate in Iraq and to purchase majority ownership (70 percent) of a private Iraqi bank, the Dar Elsalam Investment Bank, with fourteen branches across Iraq.

JPMorgan Chase received an early contract to run the Trade Bank of Iraq, a consortium of thirteen banks. Chase is the second-largest bank in the United States and it counts Condoleezza Rice as a former board member. Chase was charged with knowingly manipulating Enron’s shareholders. On June 14, 2005, Chase agreed to a $2.2 billion settlement with the University of California, the lead plaintiff in the Enron shareholders’ class action suit. A University press release explained that JPMorgan Chase allegedly “set up false investments in clandestinely controlled Enron partnerships, used offshore companies to disguise loans and facilitated phony sales of phantom Enron assets. As a result, Enron executives were able to deceive investors by reporting increased cash flow from operations and by moving billions of dollars of debt off Enron’s balance sheet, thereby artificially inflating securities prices.”

When the banking sector of New Zealand was abruptly opened to foreign private investment in 2001, every one of the nation’s banks, including the bank of New Zealand, came under foreign control. Affordable financial services and low-cost loans quickly dried up—so much so that the government of New Zealand has proposed setting up a new bank, the People’s Bank, to be owned and operated by the government itself in order to redress the inequities of the foreign-owned banks.40 Here it is interesting to note the U.S. banking laws that Bremer did not bring to Iraq. For example, basic consumer protections such as the Community Reinvestment Act, which requires banks to make credit available in low-income neighborhoods, or the Truth in Lending Act, which requires full disclosure to consumers of the cost of loans.

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