In an effort to relieve strains on the Brazilian banking sector, President Luiz Inacio Lula da Silva yesterday issued an executive order authorizing two state-owned banks, Banco do Brasil and Caixa Economica Federal, to acquire controlling stakes in smaller banks or make non-controlling investments or acquire loan portfolios from other banks, insurance companies and other financial institutions. In addition, Caixa has been authorized to form a new subsidiary to invest in the capital stock or debt of real estate construction and development companies that face liquidity problems. Guido Mantega, the Brazilian Finance Minister, and Henrique Meirelles, President of Brazil's central bank, Banco Central do Brasil, stated that these actions were intended "to help facilitate liquidity and to give an alternative to those financial institutions which don't have this liquidity" and that any acquired stakes would be temporary. The central bank has previously reduced bank reserve requirements and expressly authorized interbank purchases of loan portfolios, and yesterday announced it was entering into new foreign currency swap agreements with other central banks.