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Executives say the draft amendment is a step backwards

High-level banking executives yesterday exerted great efforts to lobby lawmakers hoping to influence them to withdraw their draft amendment to the Banking Law (銀行法), which they said would represent a retrogression in terms of a free-market economy.

Lawmakers from across party lines on Tuesday night passed a preliminary review of the proposal. The proposal is scheduled to be sent for second and third readings today.

A public hearing held by the Chinese Nationalist Party (KMT) to discuss the establishment of an effective negotiation mechanism for debt-ridden credit and cash-card holders was surprisingly attended by senior banking officials, including Charles Lo (羅聯福), vice chairman of Chinatrust Commercial Bank (中國信託), Chen Huai-chou (陳准舟), general manager of Taishin Financial Holding Co (台新金控) and Victor Kuan (管國霖), head of consumer banking at Citibank Taiwan (花旗銀行).

Although they also expressed opinions on how to help solve debtors' credit problems, their main purpose was to persuade the event's chairman, KMT Legislator Hsu Chong-hsiung (徐中雄), who proposed the amendment, to withdraw the motion on capping rates.

A bank official, who refused to be named, said foreign investors have issued warnings against the regulatory restriction and the dip in value of financial shares over the past few days has reflected investors' concerns.

"It'll only drive down the nation's finance sector and fuel the development of loan sharks," the official said.

The Bankers Association of the ROC (銀行公會) yesterday continued to voice their opposition to the amendment, saying that its passage would seriously affect the nation's financial environment. The association said it hopes lawmakers can carefully study the possible impact of the proposed amendment.

The association suggested several measures to replace the proposed restriction, including raising the success ratio of repayment negotiations to 30 percent and even 50 percent from the current 15 percent and reducing interest rates to help borrowers who have difficulties repaying their debts.

Association members also mooted applying graded interest rates to cardholders according to their credit conditions and banning improper debt collecting activities that involve violence or threats.
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