SUNDAY, JULY 1, 2001
Is a $24,000 deposit now worth $46 billion?
By JAMES F. SMITH
LOS ANGELES TIMES
MEXICO CITY - If she keeps winning court decisions against a Mexican bank, 82-year-old widow Celia Reyes could end up rubbing shoulders with Bill Gates. By her lawyer's count, her original $24,000 deposit in 1988 is now worth more than $46 billion.
Lawyers for Banco del Atlantico scoff at such calculations, putting Reyes' maximum claim at something like $150,000. And they're fighting her all the way.
Still, the case has fascinated Mexicans, who have more often been on the losing end of bank disputes. Decades of economic crises, sudden bursts of inflation and devaluations of the peso regularly sent Mexican interest rates through the roof. That pushed loan payments out of reach and forced tens of thousands of people to forfeit houses and other assets.
This time, the sky-high interest rates of years past could work in a consumer's favor. Reyes made her deposit in February 1988, when the annual interest rate peaked at 149.35 percent. Her claim is that she never withdrew the money or changed the terms other investment. So her original deposit, plus monthly compound interest, her lawyers assert, kept growing astronomically, to a sum that would be greater than Mexico's entire foreign currency reserves.
The $46 billion calculation, made by a court-appointed accountant, was made in late 1999. Using his methodology, the amount now would be something like $2.3 trillion.
"The nominal figure may be unreal, but the obligation to pay is absolutely real, just as in the 300,000 cases where banks have won judgments condemning debtors to pay far more than the total of their assets," said Reyes' lawyer, Mario Alberto Canales, said. "Those judgments are carried out until they take all the assets the debtor owns."
Reyes has already won a Mexico City court case and an appeal by the bank, the result of which is that she is owed the principal plus interest — although the legal battle over how to calculate that interest remains to be fought. A final appeal before the Supreme Court remains, in which the bank is challenging the constitutionality of the earlier rulings.
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