EC Mexico’s President AMLO Shows How It’s Done

While U.S. advocates and local politicians struggle to get their first public banks chartered, Mexico’s new president has begun construction on 2,700 branches of a government-owned bank to be completed in 2021, when it will be the largest bank in the country. At a press conference on Jan. 6, he said the neoliberal model had failed; private banks were not serving the poor and people outside the cities, so the government had to step in.

Andrés Manuel López Obrador (known as AMLO) has been compared to the United Kingdom’s left-wing opposition leader Jeremy Corbyn, with one notable difference: AMLO is now in power. He and his left-wing coalition won by a landslide in Mexico’s 2018 general election, overturning the Institutional Revolutionary Party (PRI) that had ruled the country for much of the past century. Called Mexico’s “first full-fledged left-wing experiment,” AMLO’s election marks a dramatic change in the political direction of the country. AMLO wrote in his 2018 book “A New Hope for Mexico,” “In Mexico, the governing class constitutes a gang of plunderers…. Mexico will not grow strong if our public institutions remain at the service of the wealthy elites.”

The new president has held to his campaign promises. In 2019, his first year in office, he did what Donald Trump pledged to do — “drain the swamp” — purging the government of technocrats and institutions he considered corrupt, profligate or impeding the transformation of Mexico after 36 years of failed market-focused neoliberal policies. Other accomplishments have included substantially increasing the minimum wage while cutting top government salaries and oversize pensions; making small loans and grants directly to farmers; guaranteeing crop prices for key agricultural crops; launching programs to benefit youth, the disabled and the elderly; and initiating a $44 billion infrastructure plan. López Obrador’s goal, he says, is to construct a “new paradigm” in economic policy that improves human welfare, not just increases gross domestic product.

The End of the Neoliberal Era

To deliver on that promise, in July 2019 AMLO converted the publicly-owned federal savings bank Bansefi into a “Bank of the Poor” (Banco del Bienestar or “Welfare Bank”). He said on Jan. 6 that the neoliberal era had eliminated all the state-owned banks but one, which he had gotten approval to expand with 2,700 new branches. Added to the existing 538 branches of the former Bansefi, that will bring the total in two years to 3,238 branches, far outstripping any other bank in the country. (Banco Azteca, currently the largest by number of branches, has 1,860.) Digital banking will also be developed. Speaking to a local group in December, AMLO said his goal was for the Bank of the Poor to reach 13,000 branches, more than all the private banks in the country combined.

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