A Financial Supervisory Crisis

A Financial Supervisory Crisis
China Times editorial (Taipei, Taiwan, ROC)
A Translation
December 26, 2008

Just exactly who is responsible for the financial crisis of the century? Nobel laureate in economics history Joseph E. Stiglitz says the crisis is the result of a series of policy failures. He sternly criticized former Chairman of the U.S. Federal Reserve Bank Alan Greenspan's laissez-faire policies for creating a major catastrophe. He said that when Greenspan lowered interest rates a few years ago, capital flooded the market. Coupled with a lack of market standards, this eventually led to the collapse of financial markets. He believes the financial crisis is forcing many nations' financial supervisory agencies to re-examine their position regarding financial liberalization.

Since the outbreak of the financial crisis, Greenspan has been roundly criticized. The criticisms have fallen into two categories. One. Greenspan's last wave of rate cuts lowered Interest rates too far, and for too long. It planted the seeds of the housing market bubble and inflation. Two. The Federal Reserve Bank adopted a laissez-faire attitude toward financial markets. It failed to fulfill the role of financial supervisor. It allow investment banks to take risks, and commercial banks to make housing loans to consumers unable to pay them back.

Faced with criticism, Greenspan, who believes in liberalism, came to his own defense. He said it was unfair to engage in Monday morning quarterbacking. But in late October of this year, during a U.S. House of Representatives hearing, he admitted for the first time that he made a mistake. He said he was wrong to have assumed that, based on self-interest, banks would do all they could to protect the rights and interests of shareholders. He said he was wrong to have opposed more stringent controls on derivatives.

Investment bank Lehman Brothers declared bankruptcy on September 15. The U.S. government launched an unprecedented relief program amounting to 700 billion USD, 250 billion of which will prop up the bank, by providing it with additional capital. But by mid-November, the tense situation in financial markets still had not eased. The situation remains worrisome. Stiglitz does not believe these programs can alleviate the situation in a timely manner. It's all a matter of confidence. In the final analysis, the basic mistake is to believe that "the market can regulate itself, and that the government's role ought to be reduced to a minimum."

The financial crisis was caused by the U.S. housing market bubble. It spread to the banking system, and caused the stock market to crash. Not only did banks distrust other banks, banks and their customers were also forced to re-examine their relationship. Millions in the United States have had their homes repossessed. Countless more workers are now unemployed. No one expected such tragic consequences Even Greenspan was forced to admit his mistakes. But for others, what really matters, is how to avoid making the same mistakes in the future.

Look at the United States. Now look at the Republic of China. Before and after the change in ruling parties, financial liberalization and deregulation have been an endlessly repeated mantra. But our financial markets have never been either sufficiently open, or sufficiently disciplined. The Ma administration began repeating the mantra over a decade ago. He spoke of plans for an Asian-Pacific financial center, and advocated liberalization and deregulation. But in the eyes of foreign banks, our level of financial liberalization was a far cry from that of Europe and the United States. Leave aside the question of whether agencies responsible for financial supervision neglected their duties. Our financial industry's compliance with the law is also a far cry from those in Europe and the United States.

Take one of the most sensitive issues, money-laundering controls, for example. The ROC has long been diligent in combatting international money-laundering. But when the Chen family money-laundering scandals erupted, many heavyweight financial holding company bosses were implicated. Some confessed that they helped the Chen family launder both NT dollars and US dollars through dummy overseas accounts. Some helped the Chen family move 740 million NT in cash out of their bank vaults. These are not things bankers normally do. Frankly, without such experts advising and assisting the Chen family, the Chen family would never have been able to launder several billion dollars in money by itself.

For an banker to engage in money-laundering is a serious matter. Not only would their integrity be brought into question, they would face criminal charges. But on Taiwan, many bankers involved in money-laundering continued to serve as board chairmen or general managers. Agencies responsible for the supervision of financial institutions passively waited for prosecutors to investigate. So far they have neither attempted to understand nor to prosecute these crimes. Perhaps these agencies' tacit approval is rooted in other considerations. But the bottom line is these agencies are passively abetting these bankers' money-laundering practices.

Taiwan is dreaming if it expects to become an Asian-Pacific financial center amidst the current financial crisis. Taiwan's bankers have shown no intention of complying with even the spirit of the law. Agencies responsible for the supervision of financial institutions have done absolutely nothing. Under such circumstances, our financial industry will find it hard to rid itself of its image as a notorious money-laundering center. Agencies responsible for the supervision of financial institutions had better understand they are responsible for these consequences.

中時電子報
中國時報 　2008.12.26
金融監理的放任危機
中時社論

百年罕見的金融大海嘯究竟是誰的錯？諾貝爾經濟獎得主史迪格里茲（Joseph E. Stiglitz）撰文指出，這是一系列政策失誤造成，他並嚴詞批評美國前聯準會主席葛林史班的自由放任政策釀成大禍。他認為葛老在前幾年把利率降至最 低，資金氾濫加上對市場缺乏規範，最後導致金融市場崩盤，而這場金融大海嘯也讓各國金融監理機關對金融自由化有了新的反省與檢討。

金融海嘯爆發以來，葛老飽受批評。外界的批評主要有兩方面，首先，葛老在上一波不景氣的降息政策，利率降得太低且持續太久，埋下日後房市泡沫與通膨的種 子；其次，聯準會對金融市場採取放任態度，未能扮演好金融監督者的角色，讓投資銀行鋌而走險，商業銀行把房屋貸款借給無力償還的消費者。

面對外界批評，信仰自由主義的葛老仍不斷為自己辯駁，指多數人以後見之明批評他並不公平。不過，今年十月底在美國眾議院的聽證會上，他首度坦承錯誤。他說，他犯了一個錯，誤以為銀行基於自利的原則會盡一切力量保護股東權益，因而不認同對衍生金融商品採取較嚴厲的管理。

投資銀行雷曼兄弟於九月十五日宣告破產之後，美國政府推出空前的七千億美元紓困方案，其中二千五百億美元將挹注岌岌可危的銀行以補足其資本結構，但金融市 場緊張的情勢到了十一月中旬仍未緩解，情況令人憂心。史迪格里茲認為這些方案未能適時發揮功效，完全是信心問題，所有錯誤歸根究柢就是「相信市場可以自我 調整，政府的角色可以降至最低。」

這次金融危機起因於美國房市泡沫，擴散至銀行體系、股市的大崩盤，不僅銀行與銀行之間互不信任，銀行與客戶之間的關係亦重新檢視，美國數百萬人房子被查 封，更有數不清的勞工失業。這樣的悲慘後果，不僅事先無人料到，精明的葛老也不得不認錯。不過，對其他人而言，更重要的是，未來如何避免重蹈覆轍。

看看美國，再想想台灣。政權輪替前後，台灣的金融自由化與大鬆綁的口號從來沒有停止過，不過，我們的金融市場一直處於開放不夠，紀律也不足的情況。馬政府 上台後，延續十多年前的口號，重新喊出亞太金融中心的計畫，標榜自由化與大鬆綁。在外商銀行的眼中，我們的金融自由化程度與歐美的金融中心，還差了一大 截。不過，從金融監理的角度，姑且先不論主管機關是否把金融監理當一回事，實務上，我們的金融業者對於法律的遵守，與歐美國家相比也有一大段距離。

以最敏感的洗錢防制為例，台灣向來在國際間反洗錢方面有良好的表現，不過，最近爆發的扁家洗錢案為例，多家重量級金控大老闆或負責人捲入其中，有人承認協 助將扁家的新台幣、美鈔透過人頭匯出海外，有人協助從銀行保管室搬出七億四千萬元現金，這些行為均違背了正常銀行家該做的事。坦白說，如果沒有這些行家獻 策協助扁家洗錢，光是扁一家人恐怕也無法完成龐大的數十億元洗錢案。

在國外，如果有銀行家涉入洗錢案，這是非常嚴重的事，不僅道德誠信方面受到大眾質疑，還有刑事責任；在台灣，許多涉入洗錢的銀行家仍照常擔任董事長或總經 理，金融監理機關除了被動等待檢調的調查，迄今未採取任何行動進行了解與處置，或許主管機關的默許可能另有特殊的考量，但如此的不作為無異縱容銀行家可以 從事這些不尋常的洗錢行為。

在這波金融大海嘯衝擊下，台灣要成為亞太金融中心，恐怕更是一個遙不可及的夢想，不過，如果台灣的銀行家連最基本遵守法令精神都蕩然無存，金融監理機關對 於這些缺乏金融紀律金融業負責人亦放任不管，那麼，台灣的金融業恐怕很難在國際上擺脫洗錢的臭名。金融監理機關這樣的放任政策會引發什麼後果，最好先盤算 清楚。