The proposed Financial Supervisory Board Organization Law (
Indeed, many officials said they were miffed that it failed to pass at Executive Yuan's weekly meeting last Wednesday, hinting that Minister of Finance Yen Ching-chang (
At that time, Yen proposed that the financial supervisory board could be responsible for executing financial regulatory policy, while the finance ministry could retain its policy-making powers. Yen said this was common practice in other countries.
As Yen made his opposition to the draft clear, a number of other ministerial officials took the opportunity to comment on other parts of the draft, including its budget and personnel provisions.
It's not hard to understand Yen's opposition since, if the supervisory board is established, it would usurp most the regulatory power currently enjoyed by the finance ministry.
If the draft were passed in the near term, the finance ministry would be left with only taxation as its main function. All regulatory authority over the financial services industry, -- including banking, insurance, and securities -- would be taken up by the supervisory board.
President Chen Shui-bian (
According to the draft, the board would be empowered to conduct independent investigations. It would also enjoy an independent budget and regulatory powers.
For instance, the board could order any financial institution to assist ion an investigation into fraud or other suspected criminal activities. If the parties refused to assist the board in its investigation, they could be fined anywhere from NT$50,000 to NT$250,000.
The draft also empowers the board to levy 0.03 percent to 0.1 percent of all financial institutions' annual revenue and to determine all procedures regarding the levy. Since the board's budget would be beyond the reach of legislators, there is less chance for political pressure being applied to the board regarding its regulatory duties.
In the past, a number of legislators have been accused of intervention in the regulatory body's investigations and other functions by threatening to cut its budget. The current draft has been designed to remove such concern.
The board's reconfigured personnel system would also give it greater flexibility in its hiring practices. The total number of board personnel was recently revised to between 900 to 1,200, with an additional 100 to 150 who would be responsible for developing derivative financial products and securing financial assets.
These changes have been made in order to allow the board the opportunity to hire from the private sector, instead of hiring only civil servants.
Hiring professionals such as lawyers or accountants is necessary to keep pace with very institutions the board is obliged to oversee and cannot be done unless those professionals are lured with higher compensation packages than what have been offered in the past.
It's also why the financial supervisory board's budget must be independent from the government's current legal framework.
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