The Great Afghanistan Bank Run

Thursday, September 02, 2010 , , 2 Comments

Did we mention we bombed the shit out of the bank?!

Here's the quick sitch: Kabul Bank - Afghanistan's largest - is under attack by depositors who have removed some $155 million in deposits in the last two days after news that the bank had been running a questionable operation and loaning money to insiders like Mahmood Karzai, brother of Afghan president Hamid Karzai. Karzai is a Kabul Bank shareholder, naturally. The bank's chairman Sherkhan Farnood decided an island shaped like a palm tree in Dubai would be a great investment so he took it upon himself to invest $160 million of the bank's assets in said palm tree islands and, for convenience's sake, put the properties in his name. Who wouldn't?

The U.S. government didn't find these activities to be entertainment and swooped in to stop the nonsense. Unfortunately now they may be required to prop up Afghanistan's already precarious financial system. Oh well, they're experts in doing that at this point, if they could save Bank of America I'm sure they can save some corrupt Afghan bank.


A senior U.S. official in Kabul told NBC that in recent weeks, Gen. David Petraeus, commander of international forces in the country, and other U.S. officials had “forcefully” urged President Karzai to crack down on the bank.

After reviewing the bank’s activities, “we didn’t like what we saw,” said the official. In particular, the official said, U.S. officials — “and many Afghans” — were upset that the country’s assets, much of which has been derived from billions of dollars in western aid, were being taken out of the country and invested elsewhere.

The U.S. prodding apparently prompted President Karzai to direct Afghanistan’s Central Bank to move in and oust Farnood, the bank’s chairman, and Khalilullah Frozi, the bank’s chief executive officer, from their positions. The reports of the move, first reported by the Washington Post, triggered the run on deposits that has now threatened the bank.

U.S. officials, under the direction of David Cohen, assistant secretary of the treasury for counterterrorism, are closely monitoring the situation and have dispatched a team to assist officials of the Afghan Finance Ministry as they grapple with how to deal with fallout from the bank withdrawals, a Treasury Department official said Thursday.

"U.S. officials in Kabul are in close contact with the Central Bank Governor and are monitoring the situation. The Treasury Department recently sent a Quick Response Team to offer advice to the Central Bank and we will continue to work with Afghan authorities in support of their efforts to ensure a prompt and effective response," the official said in an email.

Hahahaha "advice". See but the only advice Treasury knows how to give starts with "write a blank check" and ends with "don't worry, it'll come out of the taxpayer's ass later". Too bad that may not be an option for our little financial friends in Afghanistan.

No kidding, Karzai thinks the Treasury department (our Treasury department) should commit to saving Kabul Bank. He swears the money's good, you know, they just need, um, a co-signer.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


OldSouth said...

A true Foxworthy moment: I just can't make this stuff up!

elf2006real said...

The problem: they need the Raj. And we can't do it.