FSC deputy chief’s gaffe not likely to start run on banks

“How did she dare make such a remark?” one opposition Democratic Progressive Party heavyweight bristled.

The gaffe may touch off a bank run, said the DPP lawmaker, who wished to remain anonymous.

But it’s highly unlikely. All banks will remain closed for a three-day holiday starting today. Taiwan celebrates its “Double Ten” National Day, on October 10. It marks the beginning of the Chinese Revolution of 1911 that toppled the Qing Manchu dynasty.

By the time the banks open on Monday, the public may not be anxious enough to start running on the unnamed five banks.

Lee, deputy chief of the Financial Supervisory Commission, told reporters during a noon recess of the Legislative Yuan’s Finance Committee meeting that five banks were under observation for liquidity. “Currently,” Lee said, “smaller banks have their liquidity reduced by two-thirds, compared with Oct. 6 and 7.”

That’s why the FSC is “keeping a close eye on no fewer than five banks.” She refused to identify the quintet. “They are under our controlled observation,” Lee said at first. “They have to report on their liquidity to the FSC every day.”

Later, however, Lee had second thoughts, knowing the term she used might trigger the bank run.

So Lee changed the wording. She said the five banks are “under observation.”

At 1 p.m., Lee changed the wording again. “We are continuing to watch with concern,” she said.

The change in wording was aimed at mitigating the impact on the five smaller banks, which depositors can easily guess.

She made the slip of the tongue after being drilled by Kuomintang lawmaker Lai Shyi-bao, who expressed concern that a number of medium-sized and small banks have lost deposits totaling NT$150 billion over the past month.

“All of the money has gone to the government-owned banks,” Lai said. “In other words,” he added, “the small banks lost NT$4.8 billion a day, on average, in the past 30 days.”

He hinted at the FSC’s lax controls over bank liquidity.

His Kuomintang colleague Fei Hung-tai demanded the FSC tighten control over the liquidity of all privately-owned banks.

Back in front of the committee meeting in the afternoon, Lee told lawmakers that no banks have any problems of liquidity.

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