Congress passes new bank bailout law

Paraguay's congress has overridden a presidential veto on new bank bailout legislation, local daily La Nacion reported. Banks that go into government receivership must now be liquidated in a period not exceeding 150 days, while loans can be extended up to eight years with a real interest rate of 8%. The new law also provides for the creation of a trust fund to pay creditors, with resources being derived from the sale of assets. The finance ministry has expressed its doubts about the practical applications of the law, especially in the area of trust oversight. The Paraguayan taxpayer has had to foot the bill for a string of high profile bank failures during the last two years. Authorities intervened local bank Multibanco and finance company Corporacion Financiero during the first half. Last year one the country's largest bank Banco Aleman was intervened after a run on deposits, as was Banco Velox.