The surprise nationalization of the Mexican banking system this week was clearly a grandstand play - and it could well backfire on President Jose Lopez Portillo by adding more pessimism and uncertainty to Mexico's economic problems.
But the President had almost no choice. Mexico's private banking system was perilously close to collapse. It simply did not have the dollars to pay overseas creditors, largely in the United States, who were calling their loans.
Better to take over the banks, he reasoned, than to bail them out. After all, the government does not have the dollars to pay off the bank loans, but as owner of the banks it probably can get loan postponements, rollovers, or other reprieves from the creditors more easily than the banking system could by itself.
Moreover, Mr. Lopez Portillo, a lameduck president, figured he had little to lose. With a mere three months remaining in his six-year term, his regime is already discredited beyond any previous administration. If bank nationalization does not help in Mexico's recovery, ''at least we can say we tried,'' commented a top official.
And, of course, if nationalization somehow helps Mexico weather its economic traumas, the outgoing President could leave office smelling a bit rosier. Mr. Lopez Portillo clearly is hoping his plan will help arrest the staggering decline of the once-buoyant, oil-fueled Mexican economy.
For one thing, the move is designed to help halt the escalating dollar drain of recent weeks that has left Mexico desperately short of cash and close to national insolvency. A stiff roster of exchange controls accompanied the bank nationalization order, which also closed all banks until Monday, Sept. 6, to allow government officials time to work out takeover details and to give the battered economy an opportunity to cool a bit.
But time is short, say international bankers, who warn that Mexico has to quickly gets its financial house in order or lose whatever is left of international confidence in the Mexican economic system.
The Mexican peso has all but collapsed in recent weeks. Trading at 25 to $1 as late as February, a new four-tier exchange system last month pegged the value for those wanting to buy dollars at more than 100 to $1. Because so few dollars were available, black market rates of almost 200 to $1 were reported Sept. 1 as President Lopez Portillo was announcing his plans to take over the banks.
The takeover decision was a last-minute one. Details are sketchy. Some of the President's close associates did not know of it until he read that part of his state-of-the-nation address. The economic moves immediately led to the resignation of Manuel Mancera Aguayo, director of Mexico's Central Bank, who had opposed exchange controls. He was replaced by Carlos Tello Macias, ex-head of the troubled Sugar Bank.
In the US, there is broad skepticism about the new Mexican actions. They could complicate Mexico's negotiation of $4.5 billion in credit from the International Monetary Fund. Moreover, it is noted that the Mexican government is assuming some $10 billion in private foreign debt from the banks, adding to the $57 billion in public debt.
The move, meanwhile, has sent shock waves through the Mexican business community. It confirms the worst forecasts of the doomsayers that ''Mexico is no longer solvent.'' And it is seen by many financial people as ''a desperate move by a desperate government to try once more to undo its economic mistakes and it simply won't work,'' as a president of one of Mexico's leading companies put it.
The nationalization clearly worries the hard-pressed members of Mexico's middle class, who have looked to the banks as a source of stability. Private banks, accounting for half of Mexico's total banking, hold about 89 percent of Mexico's peso deposits, largely from the middle class.
The nationalization move, moreover, adds to the urgency felt by both domestic and foreign firms to keep from going under. These firms need dollars and there are not many to be had at any price.
How to survive between now and Monday, Sept. 6, when the now closed banks will be reopen, is also a major concern. Friday is traditional payday in Mexico - and with banks closed, many firms do not have enough pesos to meet their payrolls.