If you think that some people lost money by being greedy buying CD’s of Stanford International bank, it turns out that others were actually hit twice by setting up what is called a back-to-back, in which someone would ask Stanford in Caracas to lend you Bolívars and that bank would ask you for a guarantee in US$ which, of course, would be placed at the Antigua Bank until you paid the loan.
Thus, your dollars are now trapped in SIB Antigua (and likely lost in the pyramid) and you owe the Bolívars. Apparently this is one of the main reasons why the Venezuelan Government decided to step in and intervene the bank after saying on Wednesday that everything was fine at the local bank. As much as half of Stanford’s Bs. 500 million credit portfolio was tied to such loans.
Thus, if you were involved in such a transaction you lost your US$, or most of them at SIB and you owe the money here in Bs., a true double whammy.
Even worse, I am sure some people actually took out the loan to buy US$ and speculate that the Venezuelan currency would devalue further this year, leaving the US dollars at SIB as a guarantee. Now they owe the money and they don’t have the foreign currency they thought they would make money with.
A true double whammy!
(Some people say if the contract was written correctly and the Venezuelan Banking Superintedency knew about it, the person does not have to pay it back.)