Home Entertainment Philippines Entertainment Solons express worry about possible abuse of newly-signed FIST law, probe against DBP loans continue

Solons express worry about possible abuse of newly-signed FIST law, probe against DBP loans continue

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Solons express worry about possible abuse of newly-signed FIST law, probe against DBP loans continue

On Tuesday, February 22, House Deputy Speaker Crispin Remulla and Anakalusugan party-list Rep. Mike Defensor pointed out the possibility of banks and large firms abusing the new Financial Institutions Strategic Transfer (FIST) law.

President Duterte signed the FIST bill into law last week, believing that it will save banks and credit-granting institutions from financial bleeding due to the snowballing of non-performing loans caused by the pandemic.

BSP governor Benjamin Diokno said that this law allows banks to dispose of bad loans or assets through Asset Management Companies.

At the latest Congress hearing on DBP loans, lawmakers surprisingly talked about the newly-signed FIST law.

Although FIST is an enhancement of the old Special Purpose Vehicle (SPV) Act of 2002, Defensor pointed out the possibility of financial institutions abusing it.

“In the FIST law, and this is scary, there may be again abuses of the SPV law.”

Deputy Speaker Remulla backed up Defensor’s claims and shared his insights about the law.

“My misgivings with FIST is simple: banks aggressively go after small borrowers. Sadly, this FIST law will go easy debts of corporations.

“But the effects of this measure won’t be felt by retail banking.”

The questioning of FIST by solons will give ‘bad’ impressions to prospective investors. Lawmakers are not sure about its effectiveness; it also may be perceived as unstable.

They failed in trying to prove that SPV was abused and FIST should be implemented as a remedy.

Scrutiny of DBP’s selling of bad loans came after Duterte’s allegation that the Lopezes have unpaid debts from the state-run bank, which was eventually disaffirmed by DBP officials. However, Defensor advised DBP to explain ABS-CBN’s clearing of debts to President Duterte to prove that there were no irregularities with the transactions.

Both SPV and FIST allow financial institutions to sell bad loans and remove non-performing assets to be able to lend back to other firms.

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