IN MAY 2016, Benjamin Diokno, then a columnist for a business broadsheet, wrote an article singing the praises of president-elect Rodrigo Duterte’s 10-point economic plan.
Nothing wrong with a bit of sipsip when you are looking for a job. Sure enough, within a few days, Diokno was appointed Secretary of the Department of Budget and Management with effect from July 1, 2016.
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Bangko Sentral ng Pilipinas (BSP) is responsible for monetary policy and bank supervision.
A prudent monetary policy was implemented by Nestor Espenilla Jr and before him by Amando Tetangco Jr.
Their work as BSP Governor has done much to stabilize economic conditions.
I am less convinced about BSP’s past ability to supervise banks effectively. It is in this area that I hope Benjamin Diokno, who has been appointed BSP head after the death of Nestor Espenilla, will be more effective than his predecessors.
Anecdotally, Diokno threw his hat into the ring in a meeting with other economic managers including Secretary of Finance Carlos Dominguez III when he said in the context of the BSP vacancy: “Don’t appoint a banker or former banker.” Apparently, Dominguez asked: “Why not you?” Diokno said, “Sure, why not?”
Within a week, Diokno started to serve Espenilla’s unexpired term which ends in 2023.
Banks are not perfect institutions. They are subjected to internal and external threats to their probity. My concern is they are successful at keeping BSP at bay when they are addressing these threats. They control the narrative as to what happened. This narrative may or may not be accurate and I do not see BSP being able, in the past, to closely question the banks.
Banks are quick to quote Republic Act No. 1405, the Bank Secrecy Act. This Act passed in 1955, is short and, according to the banks’ interpretation, unchallenged by BSP, prevents banks from saying anything about a faulty transaction, no matter the circumstances.
Is it possible, more than 60 years later, for Implementing Rules and Regulations (IRR) to be promulgated so that RA 1405 can no longer be used to conceal misconduct on the part of the bank?
In 2016 hackers transferred $81 million from Bangladesh Bank’s account at the Federal Reserve Bank of New York to the Jupiter Street Branch of Rizal Commercial Banking Corporation (RCBC). Due to a slow response from RCBC, the cyberheist was successful and the money was taken from the bank. I do not believe that the full truth of what happened has emerged. This is because RCBC’s account as to what happened was not adequately challenged by BSP. Consequently, a lone female was scapegoated as a ‘rogue’ employee. Since there is no evidence that she benefitted from the heist, it is hard to believe that the whole truth was found.
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It is in the area of tenaciously establishing the truth when faulty transactions take place that Diokno can be a successful BSP head./PN
