At the pace, at the pace!

Prime Minister Vladimir Putin, at a meeting of the government presidium on October 13, demanded that measures to support the financial market be quickly implemented. He said that although liquidity is “given,” it “often does not reach the consumer.”

In this sense, Putin declared, Russia is not very different from other countries - “except that we have these opportunities that are more real, we really have them and they were not taken out of thin air.”

The prime minister admitted that enterprises in the real sector of the economy, engaged in agriculture, construction, and mechanical engineering, “are beginning to experience a certain financial hunger, although they all hope that the decisions that we have made will be implemented in the very near future.”

Especially, according to Putin, construction, leasing, mechanical engineering, and the military-industrial complex need quick measures to support the market.

On October 10, Putin said that, in addition to the measures that were taken at a meeting with President Dmitry Medvedev (and now already approved by the two chambers of parliament), additional measures had been invented. In particular, by the end of 2008, the authorized capital of Vnesheconombank (VEB) will be increased by 75 billion rubles - “both for the purchase of securities and for risk insurance,” Putin promised. “We also have in mind the possibility of purchasing Russian corporate bonds,” he added.

In addition, in 2009, at least 175 billion rubles will be allocated from the budget to ensure the stability of the financial market. The volume of reserve funds placed by the government in Russian securities will also amount to 175 billion. The placement will begin next week, VEB has been appointed as the operator.

Further: the government is going to amend the law on deposit insurance so that from October 1 of this year the volume of insurance compensation for deposits up to 700 thousand rubles will be 100%. Putin explained: “Thus, any citizen who has a deposit in a bank that is part of the insurance system, no matter what happens to this bank, has the right to receive compensation from the Central Bank’s funds within a few days.”

Meanwhile, Finance Minister Alexei Kudrin said on October 13 that the government may return to additional consideration of the issue of subordinated loans to banks. The decision to allocate a loan of 950 billion rubles for five years has already been made, but the minister did not rule out that the government “may return” to this issue “depending on the situation.” Precisely due to the fact that, as in many countries, in Russia, due to a crisis of mistrust, the allocated liquidity does not reach the real sector, a number of decisions were made, including those related to guarantees of interbank loans and lending without collateral. In addition, the state, according to Kudrin, should increase its contribution to the capital of banks, even if this is an “unusual practice.” The financial authorities of leading countries agreed on similar steps in different countries at a meeting in Washington. Financial authorities also approved the decision to restart the stock exchange securities market and the mortgage lending market, since many banks cannot attract resources and the market, including mortgages, is slowing down. In addition, a number of states, including Russia, will increase the amount of deposits covered by guarantees (in Russia, 100% guarantee of deposits of individuals will be increased to 700 rubles).