Malacañang quickly brushed aside last week a desperate attempt to derail the reappointment of Bangko Sentral Governor Amando M. Tetangco, Jr. to an unprecedented second term.

The Block Tetangco move came in the form of consecutive full page paid advertisments persuading President Aquino to reconsider his announced intention to offer a new six year term when Tetangco’s stint expires on July 2 this year.

A first open letter, originally signed only by lawyer Perfecto Yasay, Jr., was followed by a second open letter where Yasay was joined by other signatories, this time including former Vice President Teofisto Guingona, Jr. and former Sen. Aquilino Pimentel, Jr.

Yasay earlier charged Tetangco, Deputy Governors Nestor Espenilla, Jr. and Juan de Zuniga and unnamed members of the Monetary Board before the Ombudsman in an undisguised effort to pressure the BSP to grant a P25 billion emergency assistance to a thrift bank.

Secretary Ricky Carandang said that President Aquino stands by his decision to reappoint Tetangco.

Carandang reiterated the confidence of the President in Tetangco’s ability, as well as the overall positive reaction of the business and banking community.

Among those who earlier approved of Tetangco’s reappointment was Aurelio Montinola III, president of Bank of the Philippine Islands and incumbent president of the Bankers Association of the Philippines.

Montinola, himself, was earlier rumored to be a strong contender for the position of Governor.

In the traditional annual meeting between the BSP and BPI held last month, Montinola delivered what sounded to me as a virtual nomination speech for Tetangco.

Montinola praised Tetangco and the Monetary Board for their achievement during the last five years specially in addressing BSP’s principal mandate of maintaining price stability.

“The records will bear that the BSP, through its Governor and the Monetary Board, have performed exceedingly well over the past 5 years. The inflation rate fell from 7.6% in mid-2005 to 3.0% today, the peso/dollar exchange rate appreciated from P55.70/$1 to P43.80/$1 as of 2010 year-end, and the Tbill 90 fell from 5.9% to less than 1 percent today. Best of all, Gross International Reserves increased from $17.7-B in mid-2005 to $62-B today, growing from a teenager to a senior citizen in only 5 years.”

Montinola also lauded Tetangco for effective policy responses to surprise events during the period.

“Post Lehman and AIG in 2008, when ROP spreads hit a high of 800 points, the BSP formulated a gentleman’s agreement with the BAP to calm the markets by not putting any industry pressure on exchange rates for a period of 3 months. BSP also quietly opened the rediscount window to ease liquidity requirements in 2009, and began to quietly close these in 2010. Thirdly, BSP has used the SDA (Special Deposit Account) as a primary anti-inflation tool to sterilize excessive inflows.”

Coincidentally, it was shortly thereafter that Tetangco was summoned to Malacanan.

In the midst of our regular weekly Monetary board meeting,  Tetangco temporarily relinquished the chair to me while he attended an undisclosed urgent meeting.

The following morning, President Aquino’s announcement was splashed in all the papers.


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