We've been through this drama before. This time we hope to see real change.
Financial Supervisory Commission (FSC) Chairman Shih Jun-ji (
Many analysts have viewed Shih's resignation as an unfortunate end to what was a promising career when he took the post in August last year.
During his first press briefing on Aug. 4, Shih vowed to restore the public's trust in the commission by handing out just, timely and proportional punishments to curb illegal activities.
We have heard this tune too many times -- the promise made by government officials to secure financial order and amend administrative flaws. But again and again we see the same problems emerge.
To be honest, it wasn't the bank run at the Rebar-linked Chinese Bank that triggered Shih's resignation. According to Standard & Poor's estimate, the bank's deposits account for less than 1 percent of the total in Taiwan's banking sector. Its loans to the insolvent China Rebar Co and Chia Hsin Food and Synthetic Fiber Co only comprise an estimated 0.2 percent of total outstanding loans, while overall lending to the Rebar Group is estimated at less than 1 percent.
In other words, the deposit run on the bank is not expected to have a significant impact on Taiwan's banking sector and thus there is no imminent "financial crisis," because the majority of banks dealing with the Rebar Group have capped their loans in view of the vulnerable financial profiles of most Rebar Group members.
The real issue was the loss of public confidence in the government's handling of the corporate scandal. It was the perception of financial instability that erupted overnight that made Shih a perfect scapegoat for Premier Su Tseng-chang's (
Taiwan isn't a stranger to bank runs. There were more than 50 bank runs before the Democratic Progressive Party took control in 2000 and we have also seen another nine runs since then.
But years of government inertia over the Rebar Group's alleged financial mischief has raised public concern over how well the government has been managing the nation's financial sector and dealing with corporate scandals.
The Chinese Bank was already on the financial regulator's watchlist and the financial woes at the Rebar Group have been a reality for more than a decade. The Chinese Bank depositors were very much aware of that. Yet the government seemed to just stand by and wait for a ticking time bomb to explode, even though the FSC has claimed it had been monitoring the group for quite some time.
The public was also outraged because politicians were up to their usual game of fingerpointing and squabbling over who should take responsibility for the Rebar scandal. They gave no sign of constructive effort to bring wrongdoers to justice. In fact, politicians were preoccupied with their typical bureaucratic mindset, which meant that they did not take action in a timely and effective manner.
The resignation of Shih and any punishments eventually meted out to other government officials might be necessary and responsible, but they are not the solution to the Rebar scandal.
They are also not actions that will prevent future corporate scandals. The government needs to get tough on white collar crime and punish businesses that break the law and government officials who collude with them to seek personal gain.
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