Suspending ailing banks

From the government's clarification, it is known that the recently suspended banks used Bank Indonesia liquidity credits in excess of 500 percent of their equity. Moreover, three-fourths of their total assets were funded with those credits.

It does not take a banking expert's knowledge to discern that this means that public money has been irresponsibly used, through Bank Indonesia, by just a handful of bankers. In other words, Bank Indonesia put at stake public money to assist some ailing banks which were not worth assisting.

Bank Indonesia may use its function as a lender of last resort as a cover. In this function, however, Bank Indonesia should be able to recognize which banks deserve to continue to exist and which do not. It seems Bank Indonesia enjoyed coexisting with ailing banks. The dismissal some time ago of several Bank Indonesia directors did indeed raise suspicions that several Bank Indonesia officials were colluding with the ailing banks.

The crisis which is at present holding us in its grip is a consequence of business practices, lacking transparency, involving officials and businesspeople. Ailing banks and banks with problems should be immediately removed. We must not keep them any longer because this will only lead us into more crises, such as the one we are suffering at present.

-- Media Indonesia, Jakarta