Saturday, May 16, 2009

The Legacy Bank Mess: Every Man for Himself (Part 5)

It took the BSP about two weeks to summarily reject PDIC’s loan request for P14 billion. The two weeks of deliberations were considered unusually long, given that in the past, the central bank normally decided on loan requests before deposit claims were paid out (PDIC had already started servicing savings accounts claims). The central bank must have had strong reasons to disapprove the loan from its erstwhile partner who needed to service the claims of tens of thousands of depositors of 12 nationwide banks when just five months ago, it had agreed to lend P3 billion to pay a few thousand depositors of one local bank.

Could one reason be political? It is a known fact that congressman Luis Villafuerte had failed in his campaign for the speakership of the House. Blogs have posited that the congressman used his wife, who sits in the Monetary Board (MB), to influence its unfavorable decision so as to embarrass Speaker Nograles, who has been identified as a legacy preneed depositor and rumored to be a legacy bank depositor. We have read newspaper articles reporting that congressmen, who had been persuaded by the speaker to put in money in the legacy banks, have threatened to unseat Nograles if they did not get their money back. They may have been assured by the speaker that his younger brother had their backs, guaranteeing immediate settlement of their deposits.

But it is improbable that Mrs. Villafuerte could by herself persuade her fellow board members to put its co-regulator in such an untenable situation unless there were more compelling arguments. And that justification would be prior knowledge: that the younger Nograles had known about the banking anomalies and irregularities unearthed during the 2005 BSP and PDIC investigations but had not acted on them. If the MB had considered the possibility of collusion and obstruction, then it would explain the otherwise inexplicable decision of the BSP to peremptorily turn down PDIC’s loan proposal. Now that we have established that BSP was completely cognizant of PDIC’s lack of liquidity by granting it a P3 billion loan late last year, BSP, if it really wanted to be of help, could have countered with a lesser loan amount, say half or P7 billion. However, it instead chose to turn its back on its erstwhile partner and leave PDIC literally holding the proverbial empty bag.

After more than 45 days of verifying the deposits of all the closed banks, the younger Nograles must have believed that he had enough data for him to go to the central bank and request for P14 billion. If the BSP had granted the loan, then PDIC would by now have paid most if not all of the legitimate deposits. However, the unexpected denial of its loan proposal has led Jose Nograles to likewise turn his back on Celso’s assurances of prompt payment to legacy bank depositors. Instead of doing his job of paying depositors as described by his older brother, the younger Nograles has done a 180 degree turnaround in an obvious attempt to preserve his job as PDIC president. It is now everyman for himself! He is now covering up his inexcusable negligence and dereliction by trying to impress to all and sundry that he is the protector of the DIF. He is now delaying, prolonging and avoiding payment to depositors, the very ones who are supposed to be protected and insured by PDIC and the DIF. When before he was complacent with the Celso de los Angeles, shareholders, silent partners and bank officers, he now acts as the vigilant guardian of the DIF, virtually accusing the depositors of conspiracy with Celso de los Angeles et al. He is blaming and pointing fingers to all and everyone except to himself.

His first move was to change the filing and claiming process. He now requires that a Special Power of Attorney (SPA) can only be executed if the original depositor is out of the country or medically incapacitated, contrary to common, legal, and traditional practice. One can buy or sell millions worth of property based on a notarized SPA for and in behalf of the vendee or the vendor who is healthy and lives next door, but to file for a P100,000 claim, it is disallowed by the PDIC. He now demands that minors 7 years old and above personally appear before PDIC claims officers and affix their signatures when common sense demands and actual banking practices do not require such. Because minors usually cannot sign their names, banks expect their parents or guardians to sign for them; however, PDIC demands that even 8 year olds sign the forms. He has floated the idea of mailing checks payments when everyone knows that postal fraud and malfeasance is not uncommon.

All of these modifications by PDIC of its own rules and practices are time-consuming and entails more costs to the depositors. However, these are inconveniences compared to the anxiety and consternation caused by his pronouncement that most accounts were doubtful because of missing bank records and discrepancies in recording done by accountable bank officers. This has caused bewilderment and trepidation among bank depositors who have no knowledge of banking procedures and certainly no control over what bank officers do or do not do with the funds deposited. What is important to a depositor is that he walks away from the bank with a duly signed and filled up certificate of deposit or passbook. Why is Nograles blaming the victim for acts of omissions and commissions done by the very people his organization the PDIC is supposed to supervise? Even if we already know the answer to that, how is Nograles going about blaming all others except himself and his agency? Part 6 hopes to derail this devious scheme of delaying and avoiding payment of legitimate deposits.

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