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 Editorials | Issues | April 2007 
Mexico Lawmakers Use Credit System for Cheap Loans
 Andrea Merlos & Ricardo Gómez - El Universal
| | The new Chamber regulations describe the credit as an "advance," expressly avoiding the use of the word "loan," as a way of justifying the use of public funds on behalf of the legislators. |
Federal congressmen are using an internal credit system as if it were their own bank, taking advantage of lax rules to grant themselves loans with interest well below the going market rates.
An investigative report by EL UNIVERSAL reveals that since the new Congress took over in September 2006, 55 deputies have received loans with an average interest rate of 3.7 percent.
A survey of banks during this period shows that average interest on loans oscillates between 11.5 percent and 16 percent.
The system of loans in the Chamber of Deputies is not really a bank. Instead, congressmen can petition for credit which is officially called "an advance on wages or per diem allowances."
With the new regulations the Chamber established, legislators have the right to ask for an advance for up to a full year´s salary.
Congressmen then have up to 12 months to repay the loans.
To date, the Chamber has loaned out 13.4 million pesos to 55 legislators.
Of the 55 loans accounted for in the EL UNIVERSAL survey, 19 went to Institutional Revolutionary Party members, 12 went to National Action Party members and nine were given to Democratic Rervolution Party members.
Another 12 loans were given to Convergence party legislators, while the remaining three loans went to two members of the Labor Party and a legislator with the Alternative Party.
The new Chamber regulations describe the credit as an "advance," expressly avoiding the use of the word "loan," as a way of justifying the use of public funds on behalf of the legislators.
Congressmen are also permitted to petition for a one month interest-free advance on per diem expenses.
The EL UNIVERSAL report identifies many of the legislators by name along with the amount of their respective "loans."
The biggest loan was granted to Convergence party Dep. José Manuel del Río Virgen - 450,000 pesos. His total interest paid upon repayment will be only 1,850 pesos. |
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