The Finsac debacle and the search for truth
THE Finsac Enquiry into the meltdown of the financial sector in the 1990s has been going on for some time now. In the beginning it was plagued with legal troubles which resulted in its suspension and the removal of the then chairman.
Having resumed under a new chairman there is no clear indication as to when it will end, or when it does whether there will be any successful conclusion to its business. By successful conclusion is meant arriving at the truth of what led to the meltdown and whether the debtors were treated fairly in the whole matter. The obfuscations and prevarications that attended the Manatt Enquiry are not unlike the ghosts that haunt this present attempt at finding and telling the truth.
Through Mr Patterson and Dr Davies, the PNP has tried to justify the creation of Finsac and how much the country
was spared a bloodbath because of the administration’s intervention into failed institutions. It must be admitted that with the magnitude of the problem that the country faced, some rescue operation was necessary to arrest the situation and bring some stability back into the system. The implications of a total wipeout with respect to insurance policies and pension schemes cannot be understated, and the administration did the right thing in trying to address these.
But both Mr Patterson and Dr Davies are being disingenuous in being reluctant to acknowledge that the prolonged high interest rate had a deleterious effect on the sector and was a very important factor which precipitated the crisis. High interest rates to mop up excess liquidity in the system might have been necessary then, but this should only be on a temporary basis. In Jamaica these became the new norm in the 1990s. Not only were the rates high, but they were precipitously so. With an exuberant lending policy by most of the indigenous banks that were urged to lend for the development of the country, it soon became obvious that
a crisis of gargantuan proportions was in the making.
The kind of pathetic attempts by the former PNP administration to look squeaky clean in this matter will not work. Things were handled shabbily and many debtors were treated in very inhumane ways, as Dr Blythe suggested in his recent evaluation of
the Finsac debacle. The government of which he was a part dropped the ball when it came to monitoring how the debtors were treated. What is disturbing in all this is
that the former administration, through its principal spokesmen so far, have not indicated in even the most minuscule way that the administration did anything wrong in the handling of Finsac. But just as there is public perception that Bruce did not tell the full truth at the Manatt Enquiry, many are similarly convinced that Dr Davies has a lot to answer for in the disaster that Finsac became to many Jamaican entrepreneurs. They lay the blame at his feet, because as minister of finance he was the principal actor in the saga. It would help if he could demonstrate a greater sense of humility in addressing Finsac other than the kind of bravado, and for many people, arrogance, that he displays on occasions. As the present Opposition spokesman on finance, he should seriously ask himself to what extent the “fit and proper” criteria that his government developed after the meltdown for players in the financial sector apply to him and to his desire to once again sit in that office. He may think I am beating up on him (I saw him only once in person from a distance), but I am really trying to help him to embark on a soul-searching at the end of which he may be convinced that it is really time to move on.
Demonising those who disagree with their handling of the financial meltdown will not help. It certainly will not help in the case of Dr Blythe who honestly understands the mistakes that were made and the mea culpas that need to be said to bring healing and closure to this mess. Demonising the Jamaica Redevelopment Foundation will not help either. We must not forget that Finsac and the JRF are mere offshoots of the problems that faced the financial sector; they are not the reason for the problem. In the highly charged emotive environment of the commission, the tendency of those who were hurt is to cast blame in all directions at everyone and everything that is intimately connected with it. But this will not bring us to the truth. As I understand it, the JRF has worked with borrowers in restructuring their portfolios and arriving at settlements that are conducive to borrowers. As Mr Rudd himself has indicated, JRF is not averse to sitting even now with borrowers who are willing to do so and work out their situation. The main point to be made is that we will never arrive at the truth if we place blame where it does not belong. Neither will we if principal actors in this sorry mess are not prepared to show the appropriate contrition that is contingent upon wrongful (not necessarily illegal) behaviour. One of the basic ingredients of our humanity is our capacity to make mistakes and to hurt people in the process. But we also have the capacity to correct what we have done wrong and to seek the forgiveness of those we have hurt. The greatest contempt must be reserved for those who have done wrong, and in the process have hurt others, and yet continue to behave as if they have done nothing wrong or have nothing to be ashamed of. In situations like these Judas Iscariot becomes a saint.
stead6655@aol.com