What really happened to the ill-fated rural banks belonging to the Legacy Group? I honestly don’t know! What I know is that these banks collapsed almost simultaneously for reasons that we can only pick from the rumors swirling around Cebu’s coffeehouses. Why the rumors? Because the people involved in this scandal have zipped up their lips as if they also took the Oath of Omerta (the oath of a new Mafia soldier to never reveal anything to the cops when arrested) even though these people are supposedly reputable bankers.
I know that most of our people have poor memories. But during the dark days of Martial Law, even with the presence of our local and national newspapers (most were considered Marcos propaganda machines) few people believed in what was printed as news about the happenings within the conjugal Marcos Dictatorship. Since those were the times prior to cellphones, satellite tv or communications, naturally rumors swirled around and most of our people believed in the rumors rather than what was printed in the news; that’s because the newspapers lost their credibility.
A case in point was the massive funeral for the late Sen. Benigno “Ninoy” Aquino Jr. This news never appeared in the broadsheets of the national dailies like the defunct Daily Express. In the end, a new media surfaced called the Mosquito Press, which had more integrity and credibility in their reporting. People snapped away at all available copies of these newspapers that reported only the truth.
Last Monday, the Business Section of a national daily came up with a report entitled, “BSP Warns Public on Bank Rumors” That report was a quote coming from Deputy Governor Nestor Espenilla Jr. who said, “Rumors don’t do anyone any good. If people will panic, the [banking] system will be stressed and so fears will become self-fulfilling.” Deputy Gov. Espenilla made this warning in light of the proliferation of text messages that certain banks were about to collapse.
While I do agree with the Bangko Sentral ng Pilipinas (BSP) Deputy Governor that texting rumors and forwarding them to friends without verifying the source or confirming the story will become self-fulfilling. However the BSP officials must ask themselves, why do those rumors continue to persist? Truth to tell, it is due to the fact that BSP officials refuse to comment on the incident involving the closure of those ill-fated rural banks. In absence of any statement coming from the BSP, it only spins out more rumors.
A case in point is the collapsed of the Rural Bank of Subangdaku (RBS). To date, the only information that the poor depositors were able to get from its recently resigned RBS President Paz Radaza was that, there were “fictitious loans” that caused the bank to collapse. But that statement ended with the news item from PDI. Of late, Mrs. Radaza merely issued a statement that she would come out in the open to tell the whole story as to why RBS collapsed. Yet, it’s been a month since RBS declared a holiday and still no word from Mrs. Paz Radaza nor from anyone from the BSP why RBS collapsed.
If the BSP want to clear the air with those vicious rumors, then they must show some kind of transparency and issue statements that would bring confidence to our depositors with our Rural Banking system. If the BSP continues to keep mum about this… then they should not blame the people spreading the rumors but rather, they should blame themselves for their sheer lack of concern for bank depositors by their deafening silence.
Still on the BSP, the Capital Market Development Council (CMDC) has expressed its concern about the BSP’s inability to act against “Judicial obstacles” that caused the Legacy Group to collapse and they are asking for more powers for the BSP, like immunity from suit so it could act swiftly against erring banks. I’m not sure whether or not we really need to give more powers to the BSP, especially now when they have not shown any transparency in their dealings with the public.
It is better for the Financial Industry to seek a dialogue with Supreme Court Chief Justice Reynato Puno because those supposed “Judicial Obstacles” stem from the lower courts blatant misuse of temporary restraining orders (TRO). In fairness to the Supreme Court, they stopped the Court of Appeals (CA) from implementing its orders to stop the BSP from examining the Rural Banks under the Legacy Group. What is needed here is some kind of arrangement wherein the Supreme Court can issue a memorandum to the lower courts that the examination of banks by the BSP should not be subjected to a TRO. It is as simple as that.