STRENGTHENING ECONOMY A MUST, SAYS PALACE
MANILA, SEPTEMBER 29, 2008 (MALAYA) BY JOCELYN MONTEMAYOR - PRESS Secretary Jesus Dureza yesterday said the Philippines must strengthen its economy by expanding trade with Asian markets, among other things, on the heels of continued uncertainties in the economy of the United States.
Dureza said this would enable the Philippines to be prepared regardless of the outcome in the US governmentís bailout plans.
"We may get the backlash but it may not be as bad," he said.
He added that while certain reforms and measures had already been put in place by the Arroyo government, whatever happens in the US is expected to have a long-term effect not just on the Philippine market but also around the world.
"US kasi ang biggest market ng produkto natin. Pag meron silang depression they will not be buying anymore, then we have to look for other markets," he said.
Dureza said while President Arroyo was in New York, she was given a briefing by Citibank chairman and CEO Bill Rhodes on the developments in the US financial situation.
Dureza said the meeting helped provide Arroyo some "inside information" on what is happening and in the long term, what may happen."
The US government wants a $700 billion bailout accord where Treasury Department would use the amount in buying out deeply distressed mortgage-backed securities and other bad debts held by banks and other investors. The US government would later try to sell the discounted loan packages.
Sen. Loren Legarda said the government must find ways to help local regulators and banks brace themselves for more turmoil in the global financial markets.
"In a recent testimony before the US Senate (committee on banking, housing and urban affairs), Mr. (Ben) Bernanke said US regulators bailed out American International Group Inc. and The Bear Stearns Companies Inc. because the collapse of the two firms would have posed grave Ďsystemic risksí to the US and global financial markets," Legarda said.
Bernanke is chairman of the Federal Reserve, the central banking system of the United States.
"However, in Lehmanís case, Mr. Bernanke said the US investment bank was left to fend for itself and file for bankruptcy because the firmís counterparties supposedly already had enough time to prepare for its possible financial ruin," Legarda said.
"Does this mean more vigilant regulators could have forewarned local banks against Lehmanís possible collapse? That more circumspect supervisors could have pushed local banks early on to take extra precaution or hedges against the risks they faced with respect to their Lehman exposure?" Legarda asked.
Legarda said while the $386 million (P18.1 billion) in losses incurred by six Philippine lenders as a result of Lehmanís collapse seems minimal, she stressed that "any potential shocks, big or small, faced by the banking system, is always of serious concern to all of us."
Banco de Oro Unibank Inc. (BDO) had the largest exposure to Lehman at $134 million; followed by state-owned Development Bank of the Philippines at $90 million; Metropolitan Bank and Trust Co., $71 million; Rizal Commercial Banking Corp., $40 million; Standard Charteredís Manila branch, $26 million; Bank of Commerce, $15 million; and United Coconut Planters Bank, $10 million.
Chief News Editor: Sol Jose Vanzi
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