Joan B., Illinois submitted information from FAIR organization with information concerning the Bush administration and banking between Mexico and United States …
Remittances to Mexico
Even as the federal government expands its criminal investigation of companies hiring illegal aliens, it has been helping those same workers send money home cheaply. In 2001, Presidents George Bush and Vicente Fox devised programs to reduce the cost of sending remittances abroad, as part of the Partnership for Prosperity Program, an initiative to promote economic development.[i][1] New remittance programs, such as Directo a Mexico, aim to bring Mexican migrants into the mainstream U.S. financial system, regardless of immigration status.
Directo a Mexico, allows customers without Social Security numbers to wire money through the Federal Reserve System to Mexico’s central bank at little cost. About 27,000 transfers are made through the program each month.[ii][2] Banks and other financial institutions eager for Hispanic customers have joined in. Wells Fargo, Bank of America, and Harris Bank, have launched initiatives to capture a larger share of the Latino immigrant market. U.S. banks have lowered transfer fees, accepted the matricula consular (Mexican consulate-issued ID cards) as identification, acquired stakes in Mexican banks, and established cooperative arrangements to facilitate remittances.[iii][3]
The Bush administration contends the money sent south can rebuild the Mexican economy and thus reduce immigration. However, there is no evidence the inflow of money is reducing the outflow of people.
In 2006, the World Bank reported immigrants from the United States send a total of $42 million to their home countries, a 27 percent increase from 2000. (See chart below).
Remittances provide temporary financial relief at the household level and increase foreign exchange earnings for the receiving country, but they also have an equal negative effect on the balance of payments of the sending country.
For Mexico, remittances are an important source of income. Mexicans living in the United States sent a record $23.1 billion back home in 2006, putting remittances third after oil and maquiladora (assembly plant) exports as a foreign-exchange generator for Mexico.[iv][4] A 2003 survey found international remittances account for 15 percent of per capita household income in rural Mexico.[v][5]
However, the long-term effects of massive immigration are detrimental to Mexico’s development and economic viability. A 2005 study found residents in Mexico, where someone has migrated from, had lower levels of education, than in places where no one migrated. Because of illegal immigrants’ tenuous position in the U.S. labor market, they will get only unskilled jobs in the U.S, regardless of whether they spend an additional year in school. Therefore, rural migrants have little incentive to invest in education.[vi][6]
One study found that 70% of all remittances to Mexico go to living expenses (i.e. mortgage, rent, food, and utilities), compared with only one percent going to business investment. Consumption is the least productive use of income when the goal is growth and development.[vii][7] Only when new capital goods are purchased and implemented does productivity actually increase. Remittances are an expediency that encourages dependence on the United States and fails to address the address the long-term economic future of Mexico.
