Comments on: defending celso

By: orlando roncesvalles

orlando roncesvalles — Sun, 01 Mar 2009 05:20:39 +0000

Hey angela,
banks and regulators seem to have acquired a certain notoriety nowadays, whether here or in the US. Maybe I’m a polyanna, but I’ve been thinking of a way to give banks a better reputation and use them in the election process. You may be interested in my recent post, and you may re-post in full in your blog. Please see:
http://foolawecon.wordpress.com/2009/03/01/the-economics-of-poll-election-automation-–-or-using-the-atm-as-a-poll-machine/

By: jojie-riyadh

jojie-riyadh — Tue, 17 Feb 2009 09:09:51 +0000

I worked for almost 10 years with Merchants Bank during which it was merged with Bank of Commerce and PCIB and left before it became a universal bank to be eaten by Equitable Bank. I remember during this time that Banco Flipino Savings which was very stable, “subok na Matibay,Subok na Matatag” but to be closed down by then CB Pres.Jobo Fernandez (former President of Far East Bank)purely on orders by Marcos. Politics and not performance is what is ailing the financial institutions because of some vested interests by powerful groups who are greedy enough to corner the big slice of the pie.

jojie-riyadh

By: angela

angela — Mon, 16 Feb 2009 16:48:59 +0000

hmm, i think i get it, thanks, orlando ;) and i don’t mind legalese when it comes with quick n clear definitions ;))

By: orlando roncesvalles

orlando roncesvalles — Mon, 16 Feb 2009 12:40:27 +0000

Hey angela,
There’s a gym rule: no pain no gain. In investments, no risk no return. Big banks pay little interest because they can get away with it because we need them for the payments system (they backstop the clearinghouse operations for checks, although technically the BSP does the clearing). But they are the most regulated and have to put up liquid reserves against possible loan losses. Still, it amazes me that they do make money year in and year out. Something in there violates the textbook model of perfect competition. But your money is basically safe in the big banks.

In the US, the big banks messed up. Can it happen here? Sure. What’s the likelihood? I don’t know. If a criminal mind were to get hold of one big bank, he could spread the “disease” very fast. That’s what happened with the financial crisis from the mortgage loans in the US market.

I believe the Legacy group activity shows there are regulatory loopholes. But closing the loopholes is not enough. One should think through why the problem arose to begin with. Preneed is an aleatory contract (sorry for the legalese, it means it depends on uncertain events), but so is insurance. “Moral hazard” is everywhere, and somehow the insurance industry has matured and not just through regulation (I’m sure there was a time when scams plagued the insurance sector). I still think the Insurance Commissioner is the best technical home for regulating preneed companies. The problem is IC is not equipped to take on that task today.

Cheers..

By: angela

angela — Mon, 16 Feb 2009 12:04:03 +0000

so it was part of the strategy to end the depression ushered in by the crash of ‘29? … but what about the not-small (but not-so-big) depositors? why no protection for them? is the logic that it’s the small depositors who cause bank runs, not the not-small depositors, so if small depositors are assured, then there would be no danger of bank runs? but look what happened to celso’s rural banks.

By: mlq3

mlq3 — Mon, 16 Feb 2009 11:50:15 +0000

the concept of insurance for deposits was basedon the new deal and their objective was to put an end to bank runs by small depositors

By: Pedestrian Observer GB

Pedestrian Observer GB — Sat, 14 Feb 2009 20:56:15 +0000

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