Depositors won't let banks bail out rice scheme

your say February 13, 2014 00:00

Re: "A real change in attitude of Bangkokians to farmers", Letters, February 12.

Somsak Pola praised Bangkokians for sympathising with unpaid farmers. However, he has also said he cannot understand why Bangkokians objected to banks loaning money to the government to pay farmers.

The reason for the objections is that the caretaker government is forbidden to engage in new activities such as borrowing from banks. Banks’ survival depends on public confidence. Engaging in such illegitimate or illegal acts is abhorred by wealthy Bangkokian depositors, especially if loss-making ventures are involved. Runs on banks in such cases cannot be ruled out.

This government is now caught in a bind because it did not budget the required sum when it bought rice from farmers in October. Most thought that the government would last the full term of four years. The House dissolution was made in a rush in December, with the government confident it would make a quick return and be able to pay the farmers. Fortunately or unfortunately, life is full of surprises.

Songdej Praditsmanont