Brazil's Lula meets unions, to seek cheaper lending

Mon Jan 19, 2009 6:49pm EST
BRASILIA, Jan 19 (Reuters) - Brazil's President Luiz Inacio Lula da Silva will meet with state-controlled and private banks operating in Latin America's largest country to discuss ways to reduce their lending rates, labor officials said on Monday.
Leaders of umbrella organizations grouping various labor unions met with Lula at the presidential palace on Monday to push for a cut in the cost of consumer borrowing.
"The president said the question of interest rates and spread is the most important thing at the moment," said Paulo Pereira da Silva, president of Forca Sindical, one of the groups.
Lula will meet with banking representatives on Wednesday, the labor leaders said.
Lenders in Brazil have often come under criticism for the size of their spreads -- much higher rates to charged consumer and entrepreneurs than the interest rate they pay on money borrowed from the central bank or deposits.
Brazil had been enjoying a period of strong economic growth permeating all tiers of society, but the worsening credit crisis last September cut demand for many of the country's commodity exports -- a key source of government revenue.
Labor Ministry data showed on Monday that more than 650,000 jobs were lost in the month of December, particularly in the agriculture, services and construction sectors -- the biggest loss of jobs in any one month in nearly a decade.
The stock market and national currency had been soaring earlier in the year until the effects of the credit crisis struck. Overall, the country created a total of 1.45 million jobs in 2008.
Consumer credit is marketed widely in Brazil, but has become harder to find in the last few months, particularly for more expensive purchases. (Reporting by Fernando Exman; Writing by Peter Murphy; editing by Gary Crosse)