ECONOMIC MANAGERS pressed the Senate on the urgency of legislation creating asset management companies (AMCs), saying that delays in enacting such a measure hampered the economy’s recovery from the Asian Financial Crisis of 1997.

AMCs, which are designed to relieve banks of their bad loans to make them healthy enough to lend again to businesses, were authorized under the Special Purpose Vehicle (SPV) Law of 2002.

“The crisis began in 1997, but the law was enacted only five years later, when most distressed enterprises had already recovered and could already meet their financial obligations,” Finance Secretary Carlos G. Dominguez III said in his opening statement, Wednesday.

“Had the SPV been available earlier, banks could have helped businesses recover faster.”

The current legislation is known as the Financial Institutions Strategic Transfer (FIST) bill, which the House has passed. The Senate version is being evaluated by the chamber’s Committee on Banks and Financial Intermediaries.

Among the questions thrown up by the committee were the potential risks to the government of investing in AMCs.

“Why is it that we are considering the government to get involved?” Senator Ralph G. Recto said during the hearing.

“Why not let the private sector undertake the necessary risk? Why subject the government to any of this potential risk?”

AMCs acquire bad loans from banks typically at a deep discount, and hope to realize a gain when they dispose of the loan or the underlying collateral.

Senate Minority Leader Franklin M. Drilon’s concern was that the government is too cash-starved at the moment to fund such a bad-loan rescue scheme.

“The LANDBANK and the DBP (Development Bank of the Philippines) are government banks that are eligible to put up the FIST, but for the government itself to participate in the system… where will you get the capital?” he said. — Charmaine A. Tadalan