Key finance bill looks in doubt

Though the legislature is set to start a special session today to review six financial reform bills, wrangling over a proposed Financial Supervisory Board could delay the passage of one of the bills.

Opposition lawmakers say the Financial Supervisory Board should be created before allowing the Financial Holding Company Law to go forward.

The board would have broad oversight of the nation's financial industry.

But DPP lawmakers say taking up the issue of the supervisory board would delay passage of the holding company law.

And the potential delay has market watchers worried, too. Analysts say the legislation is important because it will allow Taiwan's banks, insurers and brokerages to cluster under a single corporate structure and accelerate consolidation in the financial industry -- where more than 50 banks, 100 securities companies and 300 credit co-operatives jostle for business.

Opposition lawmakers have proposed a "sunrise clause," whereby no financial conglomerate would be granted a license to operate until the Financial Supervisory Board or equivalent body is created.

Tsai Huang-liang (蔡煌瑯), a DPP caucus convener, said the proposal could delay the passage of the financial holding company law in the special session.

Opposition lawmakers said allowing newly established holding companies such as China Development Industrial Bank to operate without the necessary regulations would put the groups beyond the government's grasp.

"After discussing the issue with a number of academics and professionals, we noticed that without enough supervisory mechanisms, large financial holding companies could generate problems such as transferring company assets illegally," said Chou Hsi-wei (周錫瑋), a caucus convener of the People First Party.

"Many academics have suggested that after the financial holding company law is passed in the special session of the Legislative Yuan, it could help revive the confidence of the general public. But [the government] had better prepare complementary measures [that would provide supervisory mechanisms] in order to effectively conduct financial reforms."

But DPP Legislator Hsu Tain-tsair (許添財) disagreed, saying that the proposed "sunrise clause" would only delay the passage of the holding company law.

"We should not neglect the importance of supervisory mechanisms while passing the holding company law," Hsu said. "But I suggest that while passing the holding company law, the Legislative Yuan should also pass a resolution as an addendum, that the draft of the financial supervisory board will be listed as a priority in the next session."

Tsai noted that legislation to create a financial supervisory board had not been reviewed in committee yet, and taking up the issue now would delay the financial holding company law.

Another factor complicating today's review is a request by opposition lawmakers that Premier Chang Chun-hsiung (張俊雄) deliver a report to the legislature to explain why the six financial reform bills are urgent and require a special legislative session.

The DPP has said the demand is unconstitutional, and that it is unlawful to have the premier deliver any report and accept interpellation because the purpose of the session is to review the six bills.

Chang yesterday said he has not made up his mind as to whether to accept the legislature's invitation.