http://www.washingtonpost.com/wp-dyn/content/article/2010/09/02/AR2010090202266_pf.html
Karzai's brother calls for U.S. to shore up Kabul Bank as withdrawals accelerate
DUBAI, UNITED ARAB EMIRATES - As depositors thronged branches of Afghanistan's biggest bank, Mahmoud Karzai, the brother of the Afghan president and a major shareholder in the beleaguered Kabul Bank, called Thursday for intervention by the United States to head off a financial meltdown.
"America should do something," he said in a telephone interview, suggesting that the Treasury Department guarantee the funds of Kabul Bank's clients, who number about 1 million and have more than $1 billion on deposit with the bank.
Kabul Bank handles salary payments for soldiers, police and teachers. It has scores of branches across Afghanistan and holds the accounts of key Afghan government agencies. The collapse of the bank would probably spread panic throughout the country's fledgling financial sector and wipe out nine years of effort by the United States to establish a sound Afghan banking system, seen as essential to the establishment of a functioning economy.
Action by the United States, said Mahmoud Karzai, would prevent a run on Kabul Bank and protect other banks too. He said Kabul Bank is "stable and has money" but cannot withstand a stampede by panicked depositors.
"If the Treasury Department will guarantee that everyone will get their money, maybe that will work," said Karzai, who holds 7 percent of the bank's shares, making him the third-biggest shareholder. Karzai, who spends most of his time in Dubai - where he lives in a waterfront villa paid for by Kabul Bank - rushed to the Afghan capital Wednesday to join efforts to salvage the bank.
Treasury officials have said they have confidence in Afghanistan's Central Bank, which ousted Kabul Bank's top officials this week and has sought to stabilize the bank's finances.
But those moves may have spurred a panic: Depositors yanked at least $90 million from Kabul Bank on Wednesday, according to people familiar with the situation, and the hemorrhaging of funds accelerated Thursday.
"Yesterday was not too bad, but today is worse," said a Kabul Bank insider. "It is a very bad situation."
