Most recently, the Establishment bannered the story of the PHP 353 Million loan granted by the PAG-IBIG Fund, a government controlled mutual fund intended for housing loans, to the El Shaddai Group. Why a story like this deserved a banner headline complete with a three column picture is beyond me. Perhaps, the spin doctors have intended to produce the effect of a jovial atmosphere to welcome this big loan. But they’re stupid to think that we can’t see through this façade.
Who brokered this deal, and how much money did he or she make? In the banking sector, a loan is deemed a sale. Sales have brokers, and brokers earn commissions. Whoever brokered this deal is now a very rich man or woman, for that matter. I don’t have any problem with that really. Commissions are part of the transaction cost shouldered by the borrower, which the borrower ultimately has to pay. So nothing lost there yet. Besides, we all are entitled to earn our livelihood. But my problem lies with the process through which this loan was subject. A huge loan like this should have been subjected to the most rigid standards of credit investigation and financial analysis. Trouble is, when you dangle a huge pile of money on the face of a decision-maker, it is very likely that the decision is corrupt. And in the banking sector, corrupted decisions do not manifest themselves until it’s time to pay back, and the borrower cannot pay back.
Further, how much of the entire net worth of the PAGIBIG FUND is this PHP 353 Million? If the El Shaddai Group defaults, will our precious PAGIBIG FUND be able to survive? In the banking sector, they have what they call the single borrower's limit, which is the limit that any single borrower can loan in proportion to the bank's net worth. The Bangko Sentral has set this at 25% of the bank's net worth. Of course, the rule doesn't apply to the PAGIBIG FUND, but prudence dictates that the handlers of the FUND should have taken this into consideration. Otherwise, they should not be sitting there playing with our hard-earned cash.
Indeed, all this is worthless speculation at this moment. Although, I’m really itching to send my associates to get a first hand account of the procedure that this loan went through were it not for the fact that this can take a huge amount of manhours, and it might not be welcomed by the big bosses who approved this loan who happens to include my Kabayan from Pola, Or. Mindoro Vice President Noli Boy De Castro . But it is something you cannot take away from a PAG-IBIG FUND contributor for the last nine years who has not earned any dividends on the fund or secured any of its loans.
So in the end, this is what I can tell Big Brother Mike: I've blogged this day so I won't forget. You owe us. PAY. EVERY. PESO. ON. TIME.
Sassy Lawyer's blog on the same topic here.