The legislature’s Finance Committee on Wednesday approved a draft amendment to the Resolution Trust Committee Fund Regulatory Provisions (金融重建基金設置及管理條例) that would require that the government’s financial restructuring fund provide full compensation for financial debentures issued by Chinfon Bank (慶豐銀行).
Under the amendment proposed by Chinese Nationalist Party (KMT) Legislator Lin Chien-jung (林建榮), the financial restructuring fund will have to pay an additional NT$176 million (US$5.39 million) to cover the debentures of Chinfon Bank, which was taken over by the government in September.
The financial restructuring fund is also known as the resolution trust committee (RTC) fund, which was modeled after the RTC funds that US financial regulators used to deal with the savings and loan crisis in the 1980s.
Since its establishment in 2001, the fund has spent NT$275.3 billion to bail out 55 problem banks. On its balance sheet, it still has NT$22.4 billion outstanding, but it can only utilize NT$1.7 billion as it has to reserve NT$20.7 billion to help farmers’ and fishermen’s associations, Financial Supervisory Commission figures showed.
Because of the fund’s limited size, a previous amendment to the RTC regulation limited the fund’s compensation to covering depositary liabilities when disposing of failed banks and non-depositary debentures only when those debt holdings were issued before June 24, 2005.
The Chinfon debentures, which were issued between May and June 28, 2005, have become the subject of controversy because the previous amendment would limit compensation to those bought on or before June 24, 2005.
Jenn Lann Temple (鎮瀾宮) in Taichung County’s Dajia Township (大甲), with independent Legislator Yen Ching-biao (顏清標) as its chairman, is one of the Chinfon debentures investors that can expect to gain RTC fund compensation, if the amendment is approved by the full legislature.
Yen, who was released on parole from Taichung Prison on May 14 after serving one-third of a three-and-half-year sentence for illegal possession of firearms, was an observer at the Finance Committee meeting on Wednesday.
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