To date, the bank debt that was converted to public debt is still being payed. It will take several generations of Mexican tax payers to pay all the money back. It is one of the reasons the Mexican economy is lagging behind other Latin American countries economies.
In December 1994 during the government of priista Ernesto Zedillo (December 1994–December 2000), after 6 years of battling with inflation an overvalued peso, the reduction of international dollar reserves, political scandals in 1994 in Mexico and other factors caused the worst economic crisis in the recent history of Mexico. Skyrocketing interest rates caused that many companies were unable to meet payments and others withdrew massive amounts of capital. With the risk of another financial collapse the Fobaproa was applied in 1995.
The Fobaproa assumed debt for 552 billion dollars (equivalent to 40% of GDP of Mexico in 1997 or 2/3 of the budget for 1998). Not applying the Fobaproa would have likely caused an interruption of credit and withdrawal from saving accounts for millions of families and thousands of companies.
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