Lula: If necessary, troubled banks must be nationalized

Lula: If necessary, troubled banks must be nationalized Rio de Janeiro  - Brazilian President Luiz Inacio Lula da Silva on Wednesday spoke about the nationalization of troubled banks, in a speech before the 2009 World Economic Forum for Latin America.

Before more than 500 businessmen, bankers and government officials gathered in Rio de Janeiro, Lula stressed the fundamental role that the state has to play to bring about recovery from the ongoing financial and economic crisis, which demands the creation of a new world order.

"The nationalization of banks, even if it is temporary, must not be ruled out for ideological reasons," the Brazilian leader said.

Once again, Lula noted that this crisis is unprecedented in its nature.

"Crises are no longer a privilege of developing countries," Lula said. "We have not caused the problem, but we are part of the solution."

He said that the Group of 20 (G20) summit in London earlier this month "took the first step by acknowledging that there is no solution without the participation of developing countries" and by reviewing the distribution of power in the International Monetary Fund (IMF) and the World Bank.

Lula interpreted that the crisis forced all countries to admit that it was not honest or fair "that someone could earn billions of dollars without producing anything at all, by just exchanging papers for papers and more papers."

He noted that regulating the financial system does not mean granting the state full powers over the economy.

"I do not want an audit state, but an oversight state," he said.

In comments to reporters as he left the forum, Lula stressed the need to reestablish the flow of credit for trade, which virtually disappeared with the crisis.

"If there are no warranties for credit flows, poor countries could suffer very serious consequences. The IMF can help, but rich countries must help too," he said. (dpa)

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