Dear Editor,

I understand former Minister of Finance Dr Omar Davies, in giving evidence at the Finsac Enquiry, to be saying, among other things (a) that those responsible for the mess should be brought before the commission to give account, naming the principals of Caldon Financial, Century National Bank, Blaise Trust and Horizon among those who he said “should be held responsible for the collapse”, and (b) that one error he made during the crisis was in trusting some of the players in the banking industry to deliver on the promises they made to introduce capital, which did not materialise.

Even if you accept everything Dr Davies said with respect to the above as accurate, it does not even begin to explain the systemic collapse of banks, insurance companies and businesses which occurred in the mid-90s.

On the above theorem, one would have to go into contortions to explain for all practical purposes, the simultaneous collapse of Citizens Bank, Eagle Commercial Bank, Workers’ Bank and numerous unnamed businesses which one by one became insolvent at the then prevailing interest rates. Were they all more or less the same?

I am also puzzled by the fact that the enquiry appears to have begun at the “scene of the collision”, rather than the speed of the approaching vehicles and the conditions of the road.

From my perch, for the enquiry to be of any value, it will need to go back to some point as at, say, 1990 (or earlier), and trace the economic policies and changes in variables leading to the collapse: money supply, foreign exchange liberalisation, inflation, interest rates, exchange rates, government deficits, etc.

Many businesses that were viable at the interest rates in place became caught in an insolvency trap when they borrowed and the rates rose quickly, hitting 60 per cent and more in short order. No legitimate business model can deal with 60 per cent plus interest rates.

What was the rationale behind any dramatic changes in variables observed over the period? Was the so-called defence of the exchange rate sufficient justification? So forgive me if I am somewhat sceptical about the process. I am unable to fathom how a clearly systemic problem impacting a broad group can possibly be explained by pointing to criminality.

Or was the real culprit a combination of flawed, short-sighted or rather half-baked economic policies, which has led us to where we are today – drowning in debt?

Donovan Jackson

Kingston 10

donovan.jackson@gmail.com