How I Built a Bank in South America (2)

Wells Fargo Bank.

Its official name was Wells Fargo & Company, and at present it commanded a market capitalization of over three hundred billion dollars, placing it among the five largest banks in the United States. Unlike the other giants, it was rooted in the West rather than Wall Street, and it was the commercial bank that moved more money through residential finance than ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠any other institution in the country.

Well... that was also why it took a direct hit from the subprime mortgage crisis and staggered through the COVID pandemic. But its sheer size was a cheat code, and it managed to hold on until the end.

How did I know all this so well?

Why else.

"You're not pleased?"

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

It was my first job, after all.

This is a little... awkward.

A major bank taking an interest in San Marcos was an excellent thing. The fact that it happened to be Wells Fargo, however, stuck in my craw.

Because Wells Fargo had manufactured millions of ghost accounts to skim fees, forcibly enrolled customers in auto GAP insurance, and had even been implicated in illegal money laundering. It was, in every sense of the word, a villain of the banking world.

Of course, from San Marcos's point of view, it was still a windfall. The gap in creditworthiness between a country that a major bank had entered and one it had not was enormous. Why didn't we invest in Venezuela? Because we couldn't trust the government. But a country that a titan like Wells Fargo had walked into? Creditworthiness would shoot up like a rocket.

Beggars can't be choosers.

Ricardo seemed to understand this as well. He spoke with earnest, almost pleading eyes.

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

"How do they plan to enter?"

"Once the entry is confirmed, they say they'll open ten branches in Libertad simultaneously. After that, they'll add branches in sequence as the city expands."

"Is that so?"

A high-and-mighty commercial bank like Wells Fargo opening as many as ten branches in a small South American nation meant they were quite serious.

"...There'd be a job-creation effect as well."

"Yes. That's why we'd like to arrange a meeting to exchange views."

"Sounds good. Senior Secretary Ricardo, why don't you take the lead on this."

"I'll do my utmost."

It was a little unsettling, but an opportunity we couldn't afford to miss. Korean textile firms were pouring in in real time, industries of every kind were rising behind Tortilla Company, highways were being punched through the landscape — and now a major bank on top of it. The road for San Marcos to become a middle-income country would open.

National development didn't typically proceed at that kind of speed, of course. But compared to just a few years ago, heaven and earth might as well have been remade.

My retirement just got a little closer, didn't it?

That sweet dream lasted exactly three days before it was smashed to pieces.

"So the conditions they're demanding are a complete corporate-tax exemption for ten years, the abolition of interest-rate caps, and unlimited collection and foreclosure rights?"

The terms Wells Fargo had put on the table were simply too outrageous.

"......"

Ricardo's face, head bowed, was flushed a deep red. It was obvious how badly he'd been put through the wringer at the negotiating table.

"On top of that, if they build a branch, they want a hundred-year free lease on the land? And they refuse any interference whatsoever from the San Marcos government regarding bank operations?"

"There's also a clause that in the event of a dispute, they follow the rulings of American courts, not San Marcos courts."

"...This isn't a ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠bank deal. This is an unequal treaty."

I tossed the documents onto the table.

Fine. Even if I conceded a hundred times on abolishing the interest-rate cap — unlimited collection rights? A ban on government interference? American courts? This wasn't a proposal to do banking. It was a proposal to stick a straw into the country and rob it blind for the long haul. The conditions they were demanding were that dangerously reckless. Just look at the American subprime mortgage crisis — hadn't that happened precisely because the government let go of the banks' reins?

The problem was...

"And yet we're the ones who are desperate."

"Yes. That's right."

San Marcos, at this moment, needed a bank the way a body needed a heart. In national development, a bank was the organ that supplied the blood. Want to start a business? Loan sharks charged murderous interest, and saving the money yourself took ten years. Without a bank, nothing happened.

Moreover...

"Government-led development like this has clear limits."

The industrial structure itself was a problem. Every major enterprise in San Marcos currently ran one hundred percent on state initiative. It was efficient for now, but as the thing grew, inefficiency and corruption would inevitably take root. The national power of developed countries came from their corporations. The fact that the market capitalization of America's IT giants rivaled the entire market cap of most stock exchanges was proof enough of that. And it was the banks that had invested in those corporations and furnished the capital for them ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠to grow.

"I think we should try negotiating again."

Ricardo, knowing all this, made the suggestion carefully.

"Wells Fargo probably expected we wouldn't accept every condition they presented. That's why they threw out such an unreasonable opening bid. If we take our time and negotiate slowly, we should be able to produce terms we can live with."

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

I closed my eyes and sank into thought. Taking Wells Fargo's hand would be convenient in the short term. Capital would flow in without us lifting a finger, and the systems would assemble themselves. But if we weren't careful, San Marcos's future — just now taking flight — could end up mortgaged to Wells Fargo's enormous capital. They were already this greedy. Wouldn't they only get worse?

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

I opened my eyes.

"No. Let's reject the proposal."

"Then..."

"Rather, let's build it ourselves."

"Excuse me? A bank?"

Ricardo's eyes went round.

"It'll be difficult. But thinking about the future, it's better to create a bank with our own hands."

"But creating a bank is no ordinary task. Raising that much capital is nearly impossible, and more than anything, San Marcos currently has no bankers."

"That's true. But we didn't gather here to do possible things, did we?"

When something looked difficult, you started with collective intelligence.

"Please inform all the senior secretaries about this. Let's properly address it at the cabinet meeting in two days."

That was the motto of my governance.

Two days later. The cabinet meeting room of the Presidential Palace.

"We will now begin the meeting regarding the establishment of the San Marcos National Bank."

With Isabella's declaration, the temperature in the room ignited. The reason was simple.

This is an opportunity... This is my chance to leave a deep impression on His Excellency.

It was one of the few chances to look good in front of Eugene. And so the senior secretaries poured out the materials they had stayed up two nights preparing.

"The most urgent issue is infrastructure."

The Senior Secretary of the Interior opened fire first.

"Currently, San Marcos doesn't even have the concept of a financial computer network. Even if we use the postal network, server construction and terminal distribution alone will take a minimum of six months. In the meantime we'd have to keep the ledgers by hand — how would we prevent embezzlement ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠and errors?"

"We use people."

Sergio, the Senior Secretary of Education, shot back.

"Just like with the resident registration project, we grind the civil servants— I mean, we deploy them. The problem isn't infrastructure. It's credit. Will the people really trust a brand-new bank they've never heard of and deposit their money?"

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

Ricardo, the Senior Secretary of Finance, put up a chart.

"We have to promise at least fifteen percent annual interest, or they won't deposit the dollars they've hidden at home. The problem is we have no profit model that can cover that interest. If we only take deposits and can't issue loans, the bank will sit there accumulating a mountain of debt."

"There are plenty of places to lend to."

Lessa, the Senior Secretary of Resources and Tourism, cut in.

"Commercial districts are forming rapidly all over Libertad. Naturally, people wanting to borrow money are lining up. The problem is, if we pay fifteen percent on deposits, what interest rate do we charge on loans?"

"That's simple — just charge over twenty percent."

"The interest circulating in Libertad's loan-shark market right now doesn't even hit thirty percent. If we charge twenty percent on loans, how is that any different from a moneylender?"

"Rather, if we use Tortilla's funds to create the bank..."

"Tortilla's funds have been drained dry by the oil refinery for a long time now. And for the next year or two, there are countless places that money needs to go."

In the midst of that heated debate, Lucio, Director of the SIA, offered an opinion that was very much like him.

"What if we simply carried out a currency reform? We print our own currency to replace the dollars circulating in the market. If we tell people the bank will exchange it, we can naturally vacuum up the dollars sitting idle — and if we perform a few... operations along the way, we could generate enough capital to make founding a bank look like child's play."

At that moment, the meeting room froze over.

"That is absolutely out of the question."

Eugene frowned as if he had heard something horrific. It was because of former President Juan's "achievements."

"We'll have to do it someday, but it's too early. Considering what happened ten years ago, San Marcos's economy needs to be at least five times its current size."

In the end, there was only one conclusion. The bank had to be built in dollars.

When everyone fell silent, Eugene spoke.

"...?"

The senior secretaries' eyes went round.

"The people, Your Excellency?"

"Yes."

Eugene spoke with a voice full of conviction.

"Instead of luring them with interest, let's promote the fact that the money they deposit will create opportunities for someone else. Lending an opportunity to a person trying to take a new step. Isn't that the very essence of a bank?"

Bewilderment spread through the senior secretaries' eyes.

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

Even if it's His Excellency, is that really allowed?

That's no different from just taking their money.

Somebody stop him.

Why me?

You're the Senior Secretary of Finance!

Damn it!

Just as Ricardo, having resolved to take the bullet, was raising his hand—

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

Snap.

Isabella cut him off.

"......"

As her sharp gaze landed on them, every neck in the room shrank. Only then did they realize they had been about to go against His Excellency's will.

Isabella looked Eugene straight in the eye.

"As expected, Chief of Staff Isabella understands my meaning."

Looking at Eugene's bright, sunny smile, the senior secretaries thought the same thing at the same time.

If Chief of Staff Isabella hadn't stopped us, we would have been dragged off to the Tortilla Farm...!

Today, Isabella had saved their lives.

"Now then. Let's make this something magnificent."

"Yes, Your Excellency!"

"We'll stake our lives on it!"

The senior secretaries leaped to their feet, shouting as if competing to prove their loyalty.