Mexico’s Crisis Claims Its First Banking Victim : Latin America: Government regulators seize insolvent Grupo Financiero Asemex-Banpais. The peso plummets 5%.

Mexico’s political turbulence sent shock waves through financial markets again Friday as the economic crisis claimed its first bank victim and traders showed their discomfort with a bizarre string of political events.

As government regulators seized the insolvent Grupo Financiero Asemex-Banpais, the peso plummeted 5% to 6.33 to the dollar, its lowest level since the eve of the announcement of a White House aid package on Jan. 30. The Mexican Stock Exchange Index appeared to stabilize at 1,519.52, or 36% below its level at the beginning of the year.

The events took place against a backdrop of disconcerting political and social events this week, including a brief hunger strike by the nation’s former president and the arrest of his brother in a ruling-party assassination.

Adding to the sense of chaos was a stepped-up campaign in Washington of what is seen here as Mexico-bashing, as an international rescue package signed weeks ago under the Clinton Administration’s sponsorship came under fresh attack.

In the first bank seizure provoked by the economic crisis, regulators took over one of Mexico’s smallest financial groups, comprised of a regional bank and two insurance companies. The bank was too poorly administered to qualify for the emergency capitalization program the government is offering institutions caught in the economic crunch, according to a Treasury Ministry statement.

Banpais had suffered chronic losses and was far short of capital and reserve requirements, according to the statement. Because of those widely known problems, the action caused less scandal than the government’s seizure of two banks and a leasing company last year amid fraud charges.

President Ernesto Zedillo said during a speech in the capital that an economic program could be announced as early as next week, after the Mexican Congress votes on the terms of the U.S. rescue package.

In Washington, a central architect of the Administration’s aid package attacked opponents of the $20 billion in loan guarantees as isolationists “who seek to draw us back into nostalgia.”

With the aid program under a growing threat by a Republican rank-and-file revolt in the House, Under Secretary of the Treasury Secretary Lawrence H. Summers led an Administration counterattack, calling the collapse of the peso “the first real crisis of the 21st Century.”

The gravest threats in the post Cold War-era will come from economic crises rather than military actions, and the United States had to help Mexico to avert widespread financial panics among developing nations, Summers said in a Brookings Institution speech.

But Rep. Dana Rohrabacher (R-Huntington Beach), a leader of the growing band of GOP rebels, offered an acerbic response to Summers, saying, “I hope he is selling his home and donating the money to Mexico.”

The House Republican policy conference, where members decide which pieces of legislation to send to the floor, has twice postponed consideration of a bill that would forbid the President to spend funds for the Mexican aid program.

After meeting Thursday night with several leading dissidents, House Speaker Newt Gingrich (R-Ga.) promised to “give the whole issue a second look and let us know next week if there is a compromise position,” Rohrabacher said.

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Darling reported from Mexico City and Rosenblatt from Washington.