Chapter 57: That Time I Built a Bank in South America (2)

TL: Skye

Wells Fargo Bank.

Officially, Wells Fargo & Company, currently boasting a market cap north of three hundred billion dollars, comfortably one of the top five banks in the United States.

Unlike the other megabanks, it's headquartered on the West Coast rather than Wall Street, and in home financing it's the commercial bank moving more money than any other in America.

Well... thanks to that, it took a direct hit during the subprime mortgage crisis and wobbled through the COVID pandemic, but its sheer weight class pulled it through in the end.

How do I know all this so well?

Why else.

"Are you not pleased with it?"

"It's not that I'm displeased... I used to work there, so I was just a little surprised."

It was my first job.

'A little... awkward, though?'

Having a major bank take an interest in San Marcos is a very good thing, but the fact that it's Wells Fargo specifically gives me pause.

Because, you see...

Wells Fargo is the outfit that opened millions of ghost accounts to skim fees, strong-armed customers into auto GAP insurance (a kind of theft coverage), and has a rap sheet for money laundering to boot. A genuine supervillain of the banking world.

Of course, from San Marcos's standpoint, it's undeniably good news.

The difference in creditworthiness between a country where the majors have set up shop and one where they haven't is enormous.

Why don't we invest in Venezuela?

Because we can't trust the government.

But a country where a major like Wells Fargo has planted its flag?

Creditworthiness rockets straight up.

'Beggars can't be choosers, I suppose.'

Ricardo seemed to understand this too, because he looked at me with pleading eyes.

"If a major bank like Wells Fargo comes in, foreign investors will feel safe bringing their money."

"What kind of entry are they proposing?"

"If it's finalized, they say they'll open ten branches in Libertad simultaneously. And as the city expands going forward, they'll roll out additional branches in sequence."

"Is that so?"

For a commercial bank as stuck-up as Wells Fargo to open a full ten branches in a tiny South American country, they must be pretty serious.

"...There'd be a job creation effect too."

"Yes, which is why I'd like to set up a meeting where we can exchange views."

"Good. Senior Secretary Ricardo, please take the lead on this."

"I'll do my utmost."

A little uneasy, maybe, but not an opportunity to pass up.

With Korean textile firms streaming in in real time, with the various industries riding on Tortilla Company's coattails, with highways being punched through, and now a major bank on top of all that, San Marcos's road to middle-income status was finally opening up.

Of course, national development doesn't move quite that fast, but compared to just a few years ago, it was practically a different world.

'Retirement's getting closer, isn't it?'

But that sweet dream shattered into pieces after exactly three days.

"So, what they're demanding is: a full corporate tax exemption for ten years, abolition of the interest rate ceiling, and unlimited debt collection authority?"

Because the conditions Wells Fargo put on the table were absolutely outrageous.

"......"

Ricardo hung his head, his face flushed red. It was plain to see how badly he'd been worked over at the negotiating table.

"And on top of that, if they build branches, the land has to be leased to them free of charge for a hundred years? Plus, the San Marcos government cannot interfere with bank operations in any way?"

"There's also a clause stating that in the event of a dispute, the ruling of a U.S. court, not a San Marcos court, will apply."

"...What is this, the Eulsa Treaty?" [TL: The 1905 treaty Japan forced on Korea, stripping it of diplomatic sovereignty; byword for a one-sided, unequal agreement.]

I tossed the documents onto the table.

Fine, being as generous as humanly possible, let's say abolishing the interest rate ceiling is up for discussion.

But unlimited debt collection authority? No government oversight? U.S. courts?

This wasn't a proposal to run a banking business. This was a proposal to jam a straw into the country and bleed it dry over the long haul.

That's how dangerous their conditions were.

Look no further than the U.S. subprime mortgage crisis: the whole mess happened because the government let the banks off the leash.

The problem was...

"Even so, we're the ones who need this."

"Yes, that's correct."

San Marcos, as things stood, needed a banking presence more than anything.

For national development, banks are like the heart pumping blood.

Try starting a business: loan-shark interest will skin you alive, and saving up the money yourself takes a decade.

At the end of the day, without banks, nothing happens.

On top of that...

"Government-driven development like we have now has clear limits."

The structure of industry was also a problem.

Every major business in San Marcos is currently running on one hundred percent state drive.

That's efficient for now, but as things grow bigger, inefficiency and corruption will inevitably take root.

The strength of advanced nations comes from their corporations.

The fact that the combined market cap of America's big IT firms rivals the total market cap of most entire stock exchanges is proof enough.

And what made it possible for those corporations to grow, what invested in them and funded them, was the banks.

"I was thinking we might try negotiating again."

Ricardo, clearly aware of all this, offered a cautious suggestion.

"Wells Fargo probably didn't expect us to accept everything they proposed. That's why they lobbed such an absurd offer. If we take our time and negotiate slowly, I believe we can arrive at satisfactory terms."

"That does seem like the best option, but..."

I closed my eyes and fell into thought. Taking Wells Fargo's hand would certainly be the easy path in the short term.

Capital would flow in without us having to lift a finger, and the system would build itself automatically.

But one misstep, and San Marcos's future, just beginning to take flight, could end up mortgaged to Wells Fargo's enormous capital.

They were already being this greedy. What would they be like later?

'No matter how badly I want to retire, I can't sell the country off.'

I opened my eyes and spoke.

"No. Let's reject the proposal."

"Then..."

"Let's build one ourselves instead."

"Excuse me? A bank?"

Ricardo's eyes went round.

"It'll be difficult, but thinking long-term, we're better off creating a bank with our own hands."

"But building a bank is no ordinary undertaking. Raising that much capital is nearly impossible, and more than anything, San Marcos has no bankers right now."

"True enough. But isn't doing the impossible exactly why we're all gathered here?"

When in doubt, apply collective intelligence.

"Please brief each of the senior secretaries on the issue. We'll take it up properly at the Cabinet meeting in two days."

That was my motto for running the administration.

Two days later. Cabinet meeting room of the Presidential Palace.

"We will now commence the meeting on the establishment of a San Marcos state-owned bank."

With Isabella's declaration, the temperature in the room climbed to a scorching heat.

The reason was simple.

'This is the chance... I have to make a strong impression on His Excellency at this opportunity.'

These were among the few opportunities available to score points with Yu-jin.

And so the senior secretaries poured out the materials they'd spent the last two days pulling all-nighters to prepare.

"The most urgent issue is infrastructure."

The Senior Secretary for Home Affairs opened the first salvo.

"At present, the very concept of a financial computer network doesn't exist in San Marcos. Even leveraging the postal network, server construction and terminal deployment alone will take at least six months. During that period we'd have to keep books by hand. How on earth would we prevent embezzlement and errors?"

"We use manpower."

Senior Secretary for Education Sergio fired back.

"Just as we did with the national registration project, we grind up the civil servants... I mean, we deploy them. The problem isn't infrastructure, it's credibility. Will the public really trust some unknown, brand-new bank enough to deposit their money?"

"That's why we have to raise interest rates."

Senior Secretary for Finance Ricardo pulled up a chart.

"We have to promise at least fifteen percent annual interest if we want to draw out the dollars people have stashed away at home. The problem is we have no revenue model that can sustain that kind of interest. If we take deposits but can't move loans, the bank sits on its hands and drowns in debt."

"There are plenty of places to lend."

Senior Secretary Resa of Natural Resources and Tourism cut in.

"Commercial districts are forming rapidly all over Libertad. Naturally, there's a line of people waiting to borrow. The question is, if we pay fifteen percent on deposits, how much do we charge on loans?"

"That'd just mean charging over twenty percent, wouldn't it?"

"The going rate in the Libertad loan-shark market right now is under thirty percent. If we charge twenty percent on loans, how are we any different from the loan sharks?"

"What if we just build the bank with Tortilla's funds..."

"Tortilla's funds have been drained for ages thanks to the refinery project. And we've got money going out left and right for the next year or two."

In the middle of that fierce discussion, SIA Director Lucio offered an opinion that was uniquely his own.

"Why not go ahead and carry out currency reform? Instead of the dollars circulating in the market, we print our own currency. If we announce that the bank will exchange them, we can naturally sweep up the dollars that are sitting idle, and if we run a few operations during that process... we could generate enough funds to make setting up a bank look like easy."

In that instant, the room froze solid.

"That is absolutely out of the question."

Yu-jin frowned as though he'd just heard something unspeakable.

The reason was former President Juan's so-called "accomplishments."

The time was the global financial crisis. With the money supply having completely dried up, President Juan came up with a brilliant idea.

'If there's no money, we just print more, right?'

And so President Juan had the state printing office churn out the peso, which was the currency at the time, in reckless quantities. The result came back as a horrifying three hundred percent inflation in three months.

The one saving grace was that, with almost animal instinct, President Juan sensed the whole thing was going to hell, scrapped the peso, and designated the dollar as the official currency.

If he hadn't changed course then, San Marcos would be a hellscape that could slap Venezuela in the face right about now.

"We'll have to do it eventually, but it's premature. Given what happened ten years ago, San Marcos's economy will need to be at least five times its current size before we can even consider it."

So in the end the conclusion was one and the same. The bank had to be built with dollars.

When everyone fell silent, Yu-jin was the next to speak.

"Let's put our faith in the people."

"...?"

The senior secretaries' eyes went wide.

"The people, sir?"

"Yes."

Yu-jin spoke with a voice full of conviction.

"Instead of enticing them with interest rates, let's promote the message: the money you entrust becomes opportunity for others. Lending a chance to those who are about to take a new step forward. Isn't that the very essence of banking?"

Bewilderment spread across the senior secretaries' faces.

'He's going to force the people to make deposits?'

'Even for His Excellency, is that really allowed?'

'That's no different from just taking their money, isn't it?'

'Somebody talk him out of this.'

'Why me?'

'You're the Senior Secretary for Finance!'

'Damn it all!'

Just as Ricardo, having resolved to take one for the team, started to raise his hand...

"Y-Your Excellency, if I may be so bold..."

Snap!

Isabella cut him off.

"......"

Her sharp gaze landed on them and everyone shrank into their shoulders.

Only then did they realize they had been about to defy His Excellency's will.

Isabella looked Yu-jin dead in the eye and spoke.

"Your Excellency's noble vision will be conveyed to the people with absolute clarity, and we will see to it that every last citizen, without exception, opens a deposit account."

"As expected, Chief of Staff Isabella understands my intent perfectly."

Watching Yu-jin smile brightly, the senior secretaries thought to themselves.

'If Chief of Staff Isabella hadn't stepped in, we'd have been hauled off to Tortilla Farm...!'

That today, Isabella had saved their lives.

"Alright, let's all knock this one out of the park."

"Yes, Your Excellency!"

"I'll stake my life on it!"

The senior secretaries shot to their feet as if competing in a loyalty contest and shouted.

*****

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