Wednesday, September 24, 2008 Ledesma: Safe and sound By Jun Ledesma Sunbursts
MANY small-time operators in the banking, investments and insurance industry have taken advantage of the crisis mode obtaining in Wall Street. Wall Street is the economic hub the US. The heavy weights in the in the industry have their main hub in what they call "Apple City".
When Osama bin Laden, the guru of modern terrorism, staged his assault on the mighty America, he chose as his prime target the Twin Towers for of the World Trade Center because they proudly stand as symbol of Americas might, superiority and invincibility.
WTC has been leveled to the ground but not the pride of Wall Street and of the American people. It was as if nothing can go wrong with the system. While America chastises other countries for their sloppy economy, bureaucratic red tapes, loose regulations that invites corruption in the bureaucracy the fact was she did not pay attention to what is happening in her own backyard. The so-called subprime mortgage meltdown did not happen by accident. It was gnawing the core of giant investment houses. The regulators saw it happening but they did not stop the mania of those who manipulated mortgage transactions in massive housing passing these on to investment firms when they knew all the while that what they have lost their value.
If you think Americans trust God like what they proclaim in every dollar bill, think again. They trust their honesty and integrity more, their invincibility next and pride.
We pale in comparison. Corporate scams makes Jocjoc Bolante and Eraps scandals look like a very miserable drop in the bucket.
So the titans in big business have fallen. Fannie Mae and Freddie Mac the mortgage giants are history, Meryl Lynch has caved-in, Lehman Brothers is bankrupt. AIG sought a bridge loan from the government and because its assets are over a trillion dollars it was not a difficult decision for the US Treasury to grant it $85-billion. Sooner than soon, I am certain the AIG will be back on its feet. All it has to do is sell part of its assets to improve its liquidity and then move on.
Seven banks in the Philippines had investments in Lehman Brothers and Meryl Lynch. Their exposure however is less than one percent of their total individual worth. So there is no cause to panic as the gains of these banks can very well absorb whatever little losses they incurred. Manny Pacquiao, barely a week in his training abroad, was so scared, not of Oscar dela Hoya, when he learned that his bank was among those in the list. He flew back to the Philippines in haste.
Even as AIG is its mother company, Philamlife by the way has not a bit of umbilical cord attached to the insurance giant. Its CEO Jose Cuisia Jr., succinctly said that Philamlife has its own capital base and furthermore its investment are all placed in secured government notes and blue chip companies in the Philippines. The company, whatever are its competitors are now saying against, is still indubitably the most stable insurance firm in the country and it can take any bet on that from its salivating competitors. It is a pity, although frankly I understood their anxiety, that a few withdrew their investments with Philamlife's asset management firm. Nothing had been diminished in the company's asset since the firm stands to be most liquid and has the biggest assets in the local insurance industry. I am not saying that. I heard that at ANC from an official of the Insurance commission. So sleep tight for if you are with Philamlife you are quite secured.
By the way, it is not true that Philamlife is an agent of AIG like Totoy Talastas of Eagle Broadcasting erroneously said. The company has its own distinct insurance products and prudent investment placements that are totally independent from AIG.
Be that as it may, and after all is said and done I suddenly realize how large are the assets and far-reaching is the economic influence and dominance of AIG in the insurance industry the world over. It should assure the clients of the firm and its affiliates and subsidiaries that when some panicky clients withdrew their investments and policies in places like Taiwan, Singapore and Hong Kong AIG just shrugged it off even before the US Treasury could approve its loan. In the Philippines the fidgety knee jerk reaction of Philamlife was not even felt.
