'Marina's program caters to the financial system'

by Paulo Donizetti de Souza, from Current Brazil Network

São Paulo – According to Juvandia Moreira, president of the São Paulo Bank Workers Union, the government program of the PSB presidential candidate, Marina Silva, prioritizes the interests of the financial system. The text includes among its coordinators economists linked to the FHC era and Neca Setúbal, from Itaú: "It's no use arriving and saying 'I am the new', 'I will change politics'. The 'new' that foresees outsourcing? Reducing the role of public banks? Decreasing credit? The importance of the pre-salt oil reserves? Where will the revenue come from to change the financing of education and health? This is not new. We lived through this a long time ago and it was very bad for Brazil," says the union leader.

In recent years, there has been a shift in the way the country's economy is being managed. With more people in formal employment and rising incomes, the number of people with checking accounts and saving money is also increasing. Shouldn't banks be pleased with the state of the country's economy?

They should, because they made a lot of money, as always, but they had to work harder, for example, to expand the supply of credit. To lend more while charging less interest, banks, one way or another, had to expand their workforce. If you compare it to ten years ago, the number of bank employees increased. Now, the sector has once again seen a reduction in the level of jobs. They prefer to make money more easily, with government bonds paying higher interest rates, without having to increase their workforce. When Dilma reduced the Selic rate, this completely displeased the market. They make money with growth or recession, but in growth they have to work harder, they have to expand their workforce, they have to expand their service capacity, with smaller margins on interest rates, they need to lend more to maintain high profitability. And they have been maintaining it.

When Dilma's government took office in January 2011, the Selic rate was at 11,25% per year. Between 2012 and 2013, it reached a historic low of 7,25%. But it started rising again. It has been at 11% for four Copom meetings and it is estimated that it will end the year like that. If even with lower interest rates the revenue from credit operations grew, why did that tug-of-war that the government had with the banks stop?

The banks even launched an international campaign against Brazil, engaging in a power struggle because significantly reducing the Selic rate is bad for them, and increasing credit is bad for them. They would continue to profit, but they would have to expand their scale. Reducing profit margins so that everyone benefits – including the population – is not their approach. They don't seem to care if the productive sector loses, if the population loses. It's the banks' culture over society.

Banks have been positioning themselves in the electoral environment. There was the Santander episode, which linked its stock market appreciation to Dilma's drop in the polls. Itaú's partners are in Marina Silva's campaign. What explains this if the country is experiencing such a healthy environment for the financial system?

There's the market that speculates with stocks and the market that speculates with high interest rates. Investing in the productive sector, so that more activities benefit from the strengthening of the economy, isn't their thing. President Dilma represents the continuity of the policy of growing by betting on the domestic market, with income distribution, both with social programs that stimulate local economies and with the encouragement of a heated labor market, with low unemployment. This bothers those who prefer the path of speculation. I view Marina's government program with sadness and concern because it foresees a financial system less committed to the country's growth. It foresees the legalization of outsourcing, which is so harmful to the world of work. This is Itaú's agenda. For more than a year, Itaú's chief economist has been giving interviews putting this on the agenda.

The financial market has always argued that increasing the minimum wage and a strong labor market cause inflation. This is nonsense, because inflation has never exceeded the target ceiling in the last ten years. For the population, this policy is very important, guaranteeing income. With a stable and strong labor market, more than 90% of wage agreements have achieved increases above inflation – because this environment favors workers in negotiations. Itaú advocates for the interruption of this policy; the financial market advocates for a policy of austerity. That the government spend less and save more to pay interest. And that inflation be combated by reducing people's money, that is, with austerity measures and unemployment, as was the case during the FHC years. This already appeared in Aécio Neves's program and is in Marina's. The independence of the Central Bank is there, which means saying "I am elected and I give up controlling inflation, controlling the currency, the exchange rate, to hand it over to the bankers to control." It's reckless.

Maria Alice Setúbal, known as Neca, says she's not in the financial system, that her business is education...

If anyone wants to believe that, believe it. But look at Marina's government program, how it reflects everything the banks advocate: outsourcing, primary surplus (cash surplus allocated to interest payments), relinquishing control of the exchange rate, independent Central Bank... the program even relinquishes control over the conduct of fiscal policy. We've been discussing this with the banks for a long time, and they wholeheartedly defend Bill 4330 (a bill by Congressman Sandro Mabel, PMDB-GO, which would allow outsourcing in all activities). And it's in Marina's program. And one of the coordinators is Neca Setúbal, but it's not just her. It's Roberto Setúbal. It's Itaú. It's the banks that are including this agenda. Independent Central Bank, who benefits from that? Independent from whom? From the interests of society? That's what an independent Central Bank means: the government relinquishing policymaking and leaving the task of regulating interest rates, prices, the pace of growth, and protecting the currency to the private financial system.

The program also aims to end the policy of directed credit, which establishes rules for real estate financing; determines that a portion of the deposits of checking and savings account holders in banks be allocated to workers who will buy their own home; or to microcredit, entrepreneurship, rural credit operations, etc. This is what allows for lower interest rates and longer terms for productive activities. Eliminating directed credit means reducing opportunities and leaving them at the mercy of interest rates dictated by the banking market.

Today, rural credit predominates at Banco do Brasil, and housing credit predominates at Caixa Federal. And public banks end up pulling the private ones along. Because either they use that reserved portion of savings and compulsory reserves for those purposes, or they can't use it for other purposes. So, ideally, credit should be directed even further to stimulate other productive activities that create jobs and income. If it ends, and everything is left to free credit, the supply will decrease, and interest rates will be much higher.

Moreover, reducing the role of public banks is also part of Marina's government program. If you look at the period after the 2008 crisis, it was the public banks that controlled the supply of credit, ultimately pulling private banks along with them. This was fundamental in protecting the domestic market and jobs, ultimately ensuring that Brazilian workers didn't have to foot the bill for the international financial crisis, as Europeans are doing.

And why did Marina enter the race so strongly, even without ever having clearly presented her government plans?

This has to do with people's dissatisfaction with politics, and with the criminalization of politics by the press in recent years. It's criminalization with misinformation. True change isn't something a single person can bring about. What needs to change is the set of rules that make up the political system. It's no use arriving and saying "I'm the new," "I'm going to change politics." Does "new" mean outsourcing? Reducing the role of public banks? Decreasing credit? Downplaying the importance of pre-salt oil reserves—where will the revenue come from to change the financing of education and healthcare? This isn't new. We've lived through this for a long time, and it was very bad for Brazil. Interrupting income distribution policies is old news. The Brazilian people want change, and this change involves changing a lot of things. Campaign financing, for example, has to change; otherwise, the majority of Congress will always remain subordinate to the interests of those who finance the campaigns. That's what has been bad for Brazil.

How does the union view this campaign for a plebiscite on a Constituent Assembly solely for the purpose of political reform?

This is the way forward. We are going to all workplaces gathering votes and bringing this debate to the forefront. It's a very viable proposal, and the population needs to understand that to change things in politics, it's necessary to change a set of rules, and also change people's attitudes, to follow movements, candidacies, and governments more closely, to understand government programs in order to choose which one they identify with, and to elect someone who will implement those programs. It's no use voting for someone and then not monitoring whether they will fulfill what's in that program. In short, a person who says they will change things won't change anything, won't bring anything new, if their program is full of the old. It's a step backward in time and embraces the banks' lack of commitment to the country.