Negotiations about bank bailout fund dragged out further

The long-sought bailout fund bill that would amend the Resolution Trust Committee Fund Regulatory Provisions (金融重建基金設置及管理條例) yesterday failed to be put to a second reading in the Legislative Yuan, as negotiations continued on the amount of compensation the fund should provide to struggling banks to help them cover their non-savings debts to customers.

However, after six hours of cross-party negotiations, the Cabinet and legislature did reach a consensus yesterday that the government will not compensate problematic banks' non-saving debts occurring after the bill's third reading.

The draft amendment originally stipulated that the fund would fully cover non-saving debts through Sept. 10, two months after the expiration date for the Financial Restructuring Fund (金融重建基金) -- also known as the RTC fund -- in an effort to facilitate the self-help process of debt-ridden banks.

In a concession, the finance authority moved that date forward after Chinese Nationalist Party (KMT) Legislator Lee Jih-chu (李紀珠) voiced her opposition, citing concern over the unpredictable compensation costs in the future.

Both the Cabinet and the Legislature will on Monday continue negotiations over an initiative by the KMT caucus to cap the scale of the fund at NT$100 billion (US$3.18 billion), down from the NT$125 billion proposed by the Cabinet, before putting the bill to a second and third reading during the last Legislative session on Tuesday, People First Party Legislator Christina Liu (劉憶如) -- who has actively supported the bill's passage -- said in a telephone interview.

Liu was optimistic about the bill's passage before the session ends on Tuesday, citing the common interest of the ruling and opposition parties.