The launch of Russia’s stock markets in the early 90s and the privatization of state assets was one of the best things that happened in the short career of Dmitri Mededov, a Russian attorney.
Opening up Russia’s stock market and changing the economic system included lucrative loans against stock. These loans were designed to benefit the Russian government of President Boris Yeltsin, which could not finance its huge budget deficits by just printing more money – a stopgap measure that would just spark inflation and generate other serious financial problems.
“So we thought of a plan to have commercial banks loan all the money they wanted to the government in exchange for bonds and equities, using oil and gas or mining companies as collateral. Of course they’d lose that if they did not pay the loans back in time,” said Mededov, referring to a master plan he brought back from his studies at Yale in the United States.
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