Chávez on track to become 'banker in chief' - Allies approve new law

Venezuelan lawmakers last Friday approved a new banking law that increases government powers to control the sector and includes fines for violations.

The National Assembly, which is overwhelmingly filled with allies of President Hugo Chávez, passed the law early Friday. It describes banking as a "public service" and says banks will be considered to be of "public utility."

Opposition lawmaker Ismael García condemned the changes, saying private banks are left "up against the wall and with their hands up". He said he views the law as a prior step to a state takeover of the banking sector.

Chávez has warned that the government could seize additional banks if they don't cooperate with government rules for the sector.

Venezuela's private banks make up about 70 per cent of the banking industry, while the government controls the rest. In the past year, the government has seized control of about a dozen banks, citing financial problems and violations of banking rules.

Pro-Chávez lawmaker Ricardo Sanguino said the new law seeks to create a "responsible financial system" that favours depositors, discourages speculative activity, and promotes financing for productive development projects. He said the changes are important to bring the banking sector in line with the government's plans and strengthen the abilities of the banking regulatory agency.

The law, which will take effect as soon as it is published in the Official Gazette, also bars banks from giving loans "for the financing of consumption services or goods for amounts that exceed 20 per cent of the total of the credit portfolio".

Venezuela's banking association had previously expressed concerns about the law, but did not immediately comment on its approval.

The outgoing National Assembly has been discussing a series of controversial laws before a new congress takes office next month with a larger opposition contingent capable of hindering some types of major legislation.

Special powers

Lawmakers are expected to soon grant Chávez special powers to rule by decree in a range of areas for the next year. They are also considering separate laws that would impose regulations on the Internet, subject broadcasters to new rules, and crack down on foreign funding for non-government organisations.

Venezuelans voiced concerns about the proposed Internet regulations on Twitter, with their protest -"#SOSInternetVE" - reaching the top of the worldwide trending list on the site last Thursday night.

Lawmakers are considering extending a law governing broadcast media to the Internet, banning messages "that could incite or promote hatred," are aimed at creating "anxiety" in the population or "disrespect public authorities".

The National Assembly on Thursday also gave initial approval to a revised law dealing with political parties that would allow for the suspension of any lawmakers who defect from a party during their term. National Assembly President Cilia Flores supported it as a measure against "disloyalty, betrayal" and fraudulent misrepresentation by politicians.

During the past several years, about a dozen lawmakers have broken with the pro-Chávez bloc.

García, one of those who has turned against Chávez, condemned the change saying it shows intolerance of dissent and violates lawmakers' freedom to their own opinions.

- AP