US May Intervene On Behalf Of Bank - But Not the West Bank

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As depositors thronged branches of Afghanistan's biggest bank, President Hamid Karzai told Afghans on Thursday not to panic shortly after his brother, a major shareholder in the beleaguered Kabul Bank, called for intervention by the United States to head off a financial meltdown.

"Kabul Bank is safe," Karzai said at a joint news conference at the presidential palace in Kabul with Defense Secretary Robert M. Gates. "People need not panic, need not be worried."

Earlier in the day, Mahmoud Karzai voiced concern over Kabul Bank's ability to withstand an onslaught of depositors demanding their money back. "America should do something," he said in a telephone interview. He suggested 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.

..."If Kabul Bank collapses," he added, "it will be a disaster."

...The Treasury Department has sent a team of experts to help the Afghan Central Bank handle the crisis, but it has so far ruled out any injection of U.S. money to revive Kabul Bank. "While we are providing technical assistance to the Afghan government, we are taking no steps to recapitalize Kabul Bank," said an administration official who spoke on the condition of anonymity.

But Mahmoud Karzai, who owns 7 percent of Kabul Bank, warned that while the bank "is stable and has money," it might take U.S. intervention to beat back panic. "If the Treasury Department will guarantee that everyone will get their money, maybe that will work," said the president's brother, who rushed to Kabul on Wednesday from Dubai, where he spends most of his time in a Palm Jumeirah villa purchased with Kabul Bank money.

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