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Thursday, May 10, 2007

Ecuador bank regulator says Correa bill a danger

QUITO, May 9 (Reuters) - Ecuador's banking chief regulator said on Wednesday that the stability of the sector was in danger if President Rafael Correa wins support in Congress for a bill that would artificially lower lending rates.

"We should avoid anti-technical ways... that are a sure failure in the long run," said regulator Alfredo Vergara.

Correa, who blames banks' high interest rates and fees for stiffing productivity, has waged a battle with bank executives and Vergara to increase state control over the sector.

The popular former economy minister plans to introduce legislation in Congress to force banks to lower interest rates, open cheaper credit lines for the poor and increase scrutiny over the sector.

Correa demanded Vergara's resignation on Tuesday, but the regulator has said he will not quit and would veto any government measure he thought was damaging to the sector.

Correa has threatened to sue banks that charge clients more than the conventional interest rate of 14 percent.

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