While lawmakers appeared to make some progress in advancing the government's financial reform measures with the passage of the Agricultural Financial Law (
"The failure to pass revisions to the Statute Regarding the Establishment and Management of the Financial Restructuring Fund (金融重建基金設置及管理條例) in the just-concluded special session will impair the advancement of the promised financial reform by the government," DPP Legislator Chiu Tai-san (邱太三) said yesterday.
The passage of the Agricultural Financial Law reinforced government surveillance of the nation's 278 farmers' and fishermen's credit cooperatives.
"The legal formulation brought us hope that people and money involved in agricultural finance would be supervised in accordance with the law, and the law should minimize the chance of further financial problems in the agricultural banking sector," Chiu said.
But a NT$20 billion national agricultural fund, in the absence of a replenished financial restructuring fund, can only partly help credit cooperatives in difficulties, the legislator said.
The law creates a mechanism for shutting down failed credit cooperatives using money from the restructuring fund. It also states that the government must use the agricultural fund to bail out struggling credit cooperatives.
Chiu warned that providing money for the agricultural fund, which will be set up in a few months, may be useless since some farmers' and fishermen's associations are already in trouble.
There are 14 ailing financial institutions being monitored by the Ministry of Finance and a further 20 being observed by the Ministry of the Interior. Chung Shing Bank (
Some of the farmers' and fishermen's credit cooperatives are also under observation, but their names have not been disclosed.
Following objections from PFP lawmakers, the extraordinary session failed to come up with more money for the restructuring fund.
PFP lawmakers believe that the key to financial reform is how the government deals with problematic banks rather than just applying money to the problem.
"Take the ailing credit cooperatives, for example. Taking over or monitoring those failed banks and dividing them into good banks and bad ones is the best way the government can stop problematic banks using depositors' money to pay for their losses," said PFP Legislator Christina Liu (
"As a supervisor of those bad banks, the government must cope with their non-performing debts with minimum cost to society. The rejection of the restructuring fund should not be regarded as a major setback to financial reform," Liu said.