Wednesday, May 01, 2013

On Loan Sharks, Predatory Banks and a Senate Re-election Hopeful

The Cheapest place to get an unsecured loan in the Philippines is through informal lenders described by Senate re-election hopeful Peter Cayetano as Loan Sharks. Working in and around the traditional wet markets their going interest rate is around 20%. How Cayetano would describe the banks is an unanswered question. An unsecured personal loan from a bank will cost you 23 to 25% and if you prefer the plastic route of a credit card expect to pay up to 42%.

 With one of the world’s highest credit card interest rates it should come as no surprise that over 11% of credit card accounts are delinquent. But to make matters worse the banks themselves operate predatory procedures that push their customers, especially the venerable, into this delinquency.

Take the case of Ami, (name changed to protect her privacy) a single mother of two. Ami has an income of 15,000 pesos ($375) a month. A little under the official income eligibility limit but ok’d to help the Bank’s Credit Card mall stall meet their monthly target.  Ami was given a Citi Bank card with a 30,000 peso limit. 

For the first few months everything was fine. Ami was able to meet her minimum payments of 500 pesos a month.  The bank was so pleased that they doubled her credit limit. They didn’t ask Ami if she wanted the increase, they just did it. The increased limit saw her debt to the bank increase slightly but still she was able to meet the minimum payments. A few months later the bank was still so happy with Ami’s conduct they again increased her credit limit, this time to 100,000 pesos. Ami now had over half her annual income to spend in a heartbeat should she so desire. And again the bank didn’t ask her permission.  

Then the inventible happened. In Ami’s case it was college fees for her eldest, but it could just as easily have been a stint in a hospital, a job loss or the effects of typhoon. Her 15,000 a month could stretch only so far and so the credit card started to take a hammering just to make ends meet. Ami was thankful for her plastic respite, but the other shoe was about to fall. Her monthly minimum credit card payment leapt to half her after tax monthly income. Ami was between a rock and a hard place, something had to give and she became a credit card delinquent. 

Ami now faces the prospect of the bank’s attach dogs, a collection agency who will do all in their power to shame her into payment.  Like the bank they know Ami’s circumstances and at their masters call the preferred outcome is a long term commitment from Ami to make the minimal payments; half her income for the next two and a half years with a residual payment from her savings at the end of the term.  A spendthrift Ami may be but she isn’t dumb, she will throw herself upon the mercy of the court to get a repayment schedule she can afford. 

It can be argued that Ami didn’t have to use her credit facility, but likewise it can be argued that a bank’s duty of care to its customers is not to exceed, where known, the customer’s ability to pay. In Ami’s case the bank knew her ability to pay and pushed it to the point of no return.

So Peter Cayetano, should you be re-elected for another term in the Senate perhaps you could introduce legislation that will protect people not only from loan sharks but also predatory banks. If you are unable to convince the banks to reduce their interest rates to match those of the loan sharks which are similar to first world credit card interest rates. Perhaps you may be able protect customers from the banks predatory practice of untenable credit limits.  It’s simple really “A credit limit cannot be increased without the written consent of all parties, if it is increased, which only the lender can authorize, it becomes the lenders liability”.

Thursday, March 07, 2013

Now that I’ve got your attention

The recent incursion into Malaysia’s Eastern Province of Sabah by the "Sulu Royal Army" is less to do about claiming an ancestral homeland than it is to do with being part of the Bangsomoro solution to the Southern Philippines troubled and often violent history.

From its creation in 1963 the Malaysian Government has been paying “rent” to the Sultanate of Sulu for the Sabah region of Borneo.  Although modest, at around US$1700 per year, the payment does seem to validate the Sultan of Sulu’s claim of ownership. It is reported that a 2010 request to up the “rent” to US$ 1 Billion a year was ignored by the Malaysian Government.

The invasion of the village of Tanduo in the east of Sabah by the “Royal Security Forces of the Sultanate of Sulu and North Borneo” 3 weeks ago did not impress the Malaysian Government or the Government of the Philippines for that matter. Whilst there has been some question between these two governments over the sovereignty of Sabah it is one that has not been pursued with any vigor. And, unsurprisingly, the armed forces of Malaysia have been instructed to eject the interlopers.

The Malaysian Government has been acting as peace broker between the Philippine Government and the Moro Islamic Liberation Front (MILF), one of the groups in the Southern Philippines conducting an armed struggle for regional autonomy.  In October of last year the Philippine President, Benigno Aquino III, announced the creation of a Bangsamoro political entity, a landmark deal designed to bring peace to the troubled region. The Sulu Sultan’s actions over the past few weeks would indicate a vote of confidence in this process and an act of desperation at being excluded.

For, should it come to pass that the Southern Philippines does in fact become a place of peace, prosperity is believed to follow. Mindanao, the Sulu archipelago, and adjacent islands including Palawan which fall under the Bangsamoro deal are rumored to be a resource treasure trove that has avoided exploitation due to the decades old civil unrest. No doubt several fortunes are just waiting to be made.   

Jamalul Kiram III, one of several claimants to the Sultancy of Sulu and the most vocal over the past weeks, claims to have written to President Aquino twice since the Bangsamoro announcement and on both occasions his letters have been ignored. Reports suggest that the letters have been lost in the bureaucratic maze of the MalacaƱang Palace, the home of the Philippine Presidency. Although it is a given in the Philippines that a request ignored or that needs to be thought about is a request denied.

Perhaps President Aquino should heed the advice of the UN’s Secretary General Ban Ki-moon and proceed with a dialogue with all the parties concerned. It may well entail giving the Sultanate of Sulu a seat at the Bangsamoro table, if not with a speaking part at least observer status. Obliviously such an inclusion by the Philippine Government would require the “Royal Security Forces of the Sultanate of Sulu and North Borneo” vacate Sabah should the Malaysian Government be persuaded to let them retire.  

Friday, February 08, 2013

Where's the Harm?

The Australian media is aghast over what has been called the "blackest day in Australian sport.” Half a length behind the Lance Armstrong doping scandle comes the news from the Australian Crime Commission of widespread drug use in professional Australian sport.

Worse than a conclave of Catholic bishops pontificating about the evils of artificial contraception, politicians past and present, sporting administrators and commentators have been calling for names to be named, rules to be strengthened and civil penalties for those who don’t co-operate.

What is all the fuss about? It’s only sport, for God’s sake. You know, that spectacle designed to entertain, divert and sell more beer during the commercial breaks.  

The integrity of sporting prowess is almost as antiquated as competing in the nude.  Science has long been a handmaiden to sporting success. You can wear it, ride it, drive it but you can’t inject it. Why the hell not?

It only makes for an unlevel playing field when the practice is outlawed. And with only winners being grinners the pressure to perform is immense. Even “clean” professional athletes have a lifestyle that is seriously removed from that of a normal citizen. Swimming star Michael Phelps daily food intake when in training would have kept 6 normal people well away from anorexia. 

Like the”highly successful” war on drugs this sporting prohibition encourages the bad guys to become involved. It’s just a short hop, step and a jump for them to use the blackmail that supply offers for other nefarious deeds which may well have deleterious effects on the beloved spectacle. 

This report suggests that it is the good apples not the bad that are in short supply. Perhaps the smart move is to allow athletes to choose their poison as they and their coaches see fit. After all it is the spectacle that fans come to see and if a jab in the bum can make for higher, faster, stronger performances where’s the harm?

Saturday, January 19, 2013

I’m Sorry – Yeah, Right

So Lance Armstrong has been interviewed by Oprah and sorta said sorry for being the bad boy of international cycling. The sadist in me did enjoy watching an alpha male squirm as he tried to sound contrite. But let’s face it,  the only thing Lance Armstrong is really sorry about is being caught.

And I really can’t see what all the fuss is about. It is completely permissible for science to be used to enhance sports equipment for any advantage it may give. Why can’t the athletes stick stuff in their veins for any advantage the cocktails they consume may give? Surely advancing their use by date by a decade or two compared to their contemporaries is their decision. 

Jackson Pollock was a drunkard, Dash Snow was a junkie but their value to society is predicated on the work they produced not the stimulants they took. Why can’t athletes be given the same leeway?

Perhaps it is because athletes don’t really produce anything of lasting value. But that is the subject of another post.