Before long though, Caspian stopped allowing withdrawals. After three months, it stopped paying interest. Finally, in May, it shut its doors for good — becoming one of the largest in a long series of failures of Iranian financial institutions in recent years.
.. The outpouring of anger was directed not only at President Hassan Rouhani, who won re-election promising to revitalize the economy, but also the country’s supreme leader, Ayatollah Ali Khamenei.
.. The cascade of defaults, economists say, was not just the result of risky banking practices, but also a case study in official corruption — a major reason Iranians found their losses so infuriating. Adding to their outrage, Iranian officials made a series of statements blaming the victims for not being more careful with their money.
.. Many of the institutions, including those that merged in 2016 to form Caspian, were allowed to gamble with deposits or run Ponzi schemes with impunity for years, in part because they were owned by well-connected elites:
- religious foundations, the
- Islamic Revolutionary Guards Corps or
- other semiofficial investment funds
in the Iranian state.
.. as many as hundreds of thousands of people lost money because of the collapsing financial institutions. Iranians have a term for the growing class of victims: “property losers,” or “mal-baakhtegan” in Persian.
.. regulators have quietly steered many of the companies into mergers with larger banks to try to absorb their losses, but that has created a worsening problem of bad loans and overvalued assets throughout the banking system.
.. Economists say that as many as 40 percent of the loans carried on the books of Iranian banks may be delinquent.
.. Even Iran’s supreme leader, Mr. Khamenei, has acknowledged responsibility for the growing number of victims of “problematic financial institutions.”
“These appeals must be dealt with and heard out,” he said this month. “I myself am responsible; all of us must follow this approach.”
.. The corruption underlying the bank failures has long been an open secret
.. The loans totaled $1.9 billion, and almost all appeared to be held by well-known insiders.
.. Among them was Hossein Hedayati, a business tycoon and former member of the Revolutionary Guards, whose swift rise was so conspicuous that websites speculated about the sources of his sudden wealth. The document released by the lawmaker showed that Mr. Hedayati owed $285 million, and in a television program discussing the loan, another lawmaker, Mohammad Hassannejad, accused Mr. Hedayati of using a series of front companies to swing the loans and hide his role.
Mr. Hedayati dialed in to the program, sputtering with rage; he denied borrowing from Sarmayeh and threated to “sue everyone,” but has yet to follow through on the threat.
.. Clerics controlled religious foundations, called bonyads, that acquired commercial businesses. The largest of these, under the supreme leader, now makes up “15 to 20 percent” of the Iranian economy
.. All the semiofficial holding companies have major advantages over private businesses in favorable access to capital, tax exemptions and political connections.
.. But under a conservative president, Mahmoud Ahmadinejad, who came to power in 2005, semiofficial bodies controlled by clerics, the Revolutionary Guards or their allies dominated the newly private financial sector.
.. the Revolutionary Guards controlled at least two, while the army, the police, the municipality of Tehran and a giant religious foundation close to the Guards controlled the others.
.. the largest were usually run by individuals close to the same ruling elite
.. They say that made it almost impossible for even the best-intentioned regulators to police the banks.
.. The outsize returns promised by the banks and financial institutions lured capital that might better have gone to more productive uses
.. leaks about the high salaries of executives at state-run companies
.. The government has since tried to block the use of Telegram in Iran
The unnamed woman is one of countless Iranians who say their savings have been wiped out by the collapse of fraudulent businesses and unlicensed credit institutions in recent years. Economists are now pointing to the abrupt closure of these poorly regulated institutions as laying the foundation for the unrest that struck Iran starting in late December.
.. “Banks are shutting down without any kind of notice, and it’s creating a huge political and economic backlash at a local level,” said Suzanne Maloney, senior fellow on Middle East policy at the Brookings Institution.
.. it seems to have tapped into a deep sense of alienation and frustration, that people aren’t just demonstrating for better working conditions or pay, but insisting on wholesale rejection of the system itself.”
.. the average budget of Iranian households declined by 15 percent from 2007 — when the U.N. Security Council adopted some of its toughest sanctions on Iran — to 2016.
.. Iranian President Hassan Rouhani, a relative moderate who was reelected to a second term in May, has carried out a program of fiscal austerity. It has brought down inflation but hurt job growth
.. Rouhani has also imposed what Salehi-Isfahani called “regressive policies,” such as raising energy prices while shrinking cash transfers that the poor use to pay for essential items.
.. Other new policies have favored businesses and the middle class, whose members predominantly reside in the capital, Tehran
.. Iran has seen a “divergence in living standards (measured by per capita expenditures) between Tehran on one side and the rest of the country on the other
.. The budget envisioned steep cuts for cash subsidies to the poor, while increasing fees for things like vehicle registration and traveling abroad.
.. Rouhani’s budget was also notable because it was the first time the government made public the funds allocated to Iran’s wealthy religious foundations — as well as its powerful military and paramilitary forces.
.. The disclosure of an $8 billion budget for the Revolutionary Guard Corps, Iran’s most influential security body, prompted sharp criticism from protesters who objected to government spending on Iranian involvement in regional wars, including in Iraq and Syria.
.. Religious foundations, many of which are tax exempt, also got a boost in the new budget, including, for example, a 20 percent increase for representatives of the supreme leader, Ayatollah Ali Khamenei, posted at Iran’s universities.
.. Rouhani sold the nuclear deal to Iranians as crucial for reviving the ailing economy. Iranians have been disappointed that growth has not been faster, including 74 percent who said in July that there had been no economic improvement as a result of the deal