Philippine Banking System: “Most Heavily Fortified Bastion of Privilege and Profit”

The unholy trinity of banking-central banking and government patronage system operates even in the Philippines as well.

From Joe Studwell Asian Godfathers, Money and Power in Hong Kong and Southeast Asia [p.105], (bold emphasis mine)

Such antics caught up with the Philippines in the early 1980s, when the debt-laden regime defaulted on its foreign on its foreign borrowings and several banks failed. After the departure of Marcos in 1986, however, the government of Cory Aquino bailed out the banking system by issuing high-yielding government bonds and providing additional, cheap government deposits. The cost of this action became apparent in 1993 when the old central bank was closed down with a US$12-billion write-off to be born by the treasury, and hence taxpayers. The annual cost of servicing this debt in the mid 1990s was more than the Philippines’ health budget. Those tycoons who did not, like Benedicto and Disini, flee with Marcos, and survived the Philippine Commission on Good Government, found their banks revived with public money and able to enforce cartel pricing that in the late 1990s gave them the best banking margins in Asia. Despite all the trading and production cartels and monopolies sanctioned by Marcos and others in the Philippines, Paul Hutchcroft concludes that the banking sector has always been the ‘the country’s most heavily fortified bastion of privilege and profits’.

That’s the Philippine version of ‘Financial Repression’.

Also, here lies the political "dirty laundry" which have largely been unseen by the public. Good government? Bah!