Losing twice: The Stanford International Double Whammy Special

February 20, 2009

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.)

One Response to “Losing twice: The Stanford International Double Whammy Special”

  1. Alex Dalmady Says:

    I was afraid of this. If you saw “Independence Day”, you’d get it. Antigua was the mothership.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 11,644 other followers

%d bloggers like this: