Unlikely

A few weeks ago, many of us thought the effort to change the Constitution would proceed like an unstoppable train. The draft of the new Constitution will be rammed through quickly enough so that a plebiscite may be conducted next May and the transition toward a federal form of government will begin in earnest.

Over the last few days, the outlook for this ambitious political project dimmed suddenly. Now it seems unlikely anything will happen with this project – at least according to the schedule imagined by the most ardent proponents of Charter change at the House of Representatives.

The biggest stumbling block to the Charter change train rolling is the Senate.

The senators have taken a clear position on the matter. They will not participate on joint deliberations with their colleagues in the House. They will insist on voting separately as a chamber. A few senators have questioned the very need for constitutional renovation.

Charter change proponents at the House of Representatives worked on the scenario of a joint session. If that happened, the votes of the supermajority there will simply drown out the votes of the senators. The Senate would simply be bullied into irrelevance.

The Senate has drawn a clear line on this matter. The only way the Senate could possibly be broken into submission is to draw the immensely popular President Duterte into the fray and on the side of the congressmen.

But Duterte does not seem inclined to play the game designed for him by the congressmen. The Palace has issued a statement saying the President will not intervene in the spat between the two chambers of Congress.

Besides, the Comelec does not have the material time to prepare for a plebiscite. Everything becomes sound and fury signifying nothing.

Looted

Each time a bank fails, the Philippine Deposit Insurance Corp. (PDIC) takes a hit. The agency takes over what remains of the failed bank’s assets, takes care to pay out depositors’ claims and does a forensic audit on how the bank failure happened.

Earlier this month, I saw three paid notices taken out by the PDIC to inform creditors of seven closed provincial banks about hearings to be conducted by the agency’s Liquidation Court. On the basis of those hearings, the agency prepares asset distribution plans to somehow enable depositors to recover some of their money.

Fortunately, these are small banks. Their failure will not injure our banking system.

The BSP maintains particularly close supervision of the big banks. This is to ensure that banking protocols are strictly observed and the money depositors entrust the banks are handled with utmost prudence.

It has now become virtually unthinkable for a big bank to fail. The strict regulations maintained by the BSP, including single borrower limits and prohibitions on lending to directors, owners and shareholders, help keep our banking system strong. The failure of a bank nearly means a failure of the regulators.

It has not always been this way, though. There was a time when family owned banks were not as tightly regulated and were pretty much free to lend to enterprises they own. That has been the cause of many bank failures.

 Those of a certain age might have fond memories of Banco Filipino. In the seventies, it was one of the biggest banks in the country. It had a highly visible campaign to attract small savers, especially among the young. It was not only a family owned bank, it positioned as a family bank.

During the twilight years of the Marcos regime, Banco Filipino suffered liquidity problems. Banking regulators ordered it closed. The dreaded Metrocom was called in to enforce the order by the barrel of the gun.

After many years of litigation, Banco Filipino was allowed to reopen. It struggled with its balance sheet and could not fully serve depositors who wanted their money back.

On March 2011, the BSP ordered Banco Filipino closed for a second time. The banking regulators found out that the bank’s liabilities hugely exceeded its assets. Only 53 percent of the bank’s 177,000 depositors were covered by PDIC insurance.

After auditing the bank’s operations, the PDIC discovered anomalies. The auditors discovered that large amounts of bank funds went to the personal use of bank officers.

As a result of the audit, the agency decided to file estafa cases against several personalities associated with the bank. Among them were: former bank vice-chairman Albert “Bobby” Aguirre, scion of the family that founded the bank; former chair and president Teodoro Arcenas and former senior vice president Romeo Avila.

Auditors discovered that Aguirre drew P39.94 million of bank funds for the use of his Los Tamaraos polo club and for sponsoring the Queen’s Cup polo tournament in London. An additional P8.466 million of depositors’ money was used to pay for personal expenses such as clothing, toiletries and perfumes.

Avila drew the biggest share of bank funds, estimated at P433.81 million. A certain Nyreen de los Santos is reported to have drawn P103.095 million. Arcenas was found to have drawn P1.216 million.

According to the PDIC, the last estafa case is actually the third filed against personalities associated with Banco Filipino. Because our courts are notoriously congested, these cases could linger on for years.

In the meantime, the PDIC could not recover pilfered funds that will help the agency pay back the failed bank’s depositors. In the end, it is the small depositors who will bear the brunt of this injustice.

The slow litigation could also undermine confidence in the way our banks are regulated.